The interlinkages of macroeconomics policy instruments, fuel prices and GDP growth: A case for Namibia

<title>Abstract</title> <p>Understanding the mismatch between political goals and balancing equitable economic and sustainable growth requires a considerable robust analysis. Previous policy scenarios which were advocating for balanced equitable prosperity proved inconsistent policy goals. To illustrate this, we use Namibian macroeconomic policy instruments, fuel prices and Gross Domestic Product growth to unpack the interlinkages and impact. From a modelling perspective, the application of simultaneous equations in a Generalised Methods of Moments framework by following a stepwise estimation approach on quarterly data of selected macroeconomic variables, is robust. Results indicate that macroeconomic drivers such as prime rate, diesel price and electricity usage are related to the primary industries. Results indicate that a one percent increase in fuel price will decreases Gross Domestic Product growth by 0.554%. This reduction has implications on other macroeconomic fundamentals. Furthermore, the level of budget allocation on Namibian education contributes towards human capital formation to accelerate development in Namibia. Macroeconomic policies’ spillovers and interlinkages show an incoherent and mismatch of steps to foster sustainable economic growth. Misaligned budget allocation and persistent lack of strict prioritisation of financial resources to the primary industries, such agriculture have yielded suboptimal policy instrument impact. We recommend that country specific interventions should be pursued and focus on public trust to address socio-economic righteousness that optimize natural resources. We further recommend that developing countries to be more flexible in adopting policy instruments that focus on improving factor productivity in the primary and secondary economic sectors to foster sustained economic growth.</p>