Rovens records first positive growth in three years
Tuesday, November 26, 302 AP
Web posted at 1031 UST.
Rovens has recorded a 1.6% growth rate for the period July to September, and while there are encouraging signs, analysts are also claiming "rubbery figures" were used.
Their smiles were barely disguised. Their joy more obvious than that of a bride on her morning. When President Weissman and Finance Minister Gottlieb walked down the corridor to the press briefing room in Haastadt's Finance Ministry building, they were positively beaming.
"Ladies and Gentlemen, I am happy to report that the Ministry of Finance and the Economy reports that the Rovenian headline growth rate for the third quarter, 302ap," the President announced, pausing briefly, "was 1.6%."
"This is undeniably the happiest day of this government," the President said, "as it demonstrates that our policies have worked, they have improved the state of the Rovenian economy."
However, despite the obviously delight, the President and his Finance Minister should have taken a moment to consider the details. While the final figure for real (inflation removed as a factor) GDP growth rate is 1.6%, this includes the rubbery 1.9% growth figure for Patakia, where the rebel communist regime governs and cash money is non-existent. Instead, the economy is measured by Haastadt using the amount and quality of goods produced, a debatable and subjective, not to mention controversial, measure.
With Patakia removed from the equation, growth for Haastadt-governed Rovens is a more sedate 0.11%. Furthermore, broken down by region and only Gvonj is showing positive growth of 4.6%, with Port of Olives' -1.1% and Guidarma's -0.1% negative growths pulling the country down overall. Gvonj has been the scene of substantial foreign -- mostly Utanian -- investment over the past six months, with Belson Corporation investing R200 million a quarter mostly in Gvonj, to help develop the poverty-stricken region. This investment has been the bulk of the reason for the region's impressive quarterly growth, which has pulled the country up.
This is not to suggest that there is no cause for celebration. National unemployment is down for the first time in three years, from 18.4% to 18.2%, though the actual number of people unemployed rose by 600 people (which means the 160,000 people who joined the workforce last quarter, or a matching unemployed person, found jobs).
Investment is also up in all sections of the economy, up overall by 11.9% which suggests that companies are confident enough to expand or improve their production, fuelling spending in other sections of the economy. However, much of the investment has also been matched by imported goods, being partly paid for using the C8 billion borrowed from the Lendosan Confederation. Fortunately, the Rovenian Reserve Bank's foreign currency reserves will hold out for another six years based on the current rate of use, allowing the country plenty of time to develop its export industries.
Exports are also up by 7.3%, too, though imports are up by 16.5%. In addition, a residential housing boom has hit Guidarma, with housing construction up 11.2%.
Finally, with the government running a major surplus, it doesn't need to borrow anymore, meaning interest rates are dropping, and at their lowest in two years, and dropping still. As the government buys back its bonds, the money being paid back is now being invested in Rovenian companies, pushing the investment rate up, and fueling the economy even further.
President Weissman also has cause for relief as his own budget is now in the black, by some 1.6 billion Roj a quarter (C1.6 bn), which is almost 10% of the budget. It also means that the government could pay back all its own debts, some R15 billion, or 16% of the economy, in two and a half years, though this is unlikely to be the government's objective: arresting the ever-mounting debt was the key to growth, not paying back all outstanding loans. Instead the surplus gives some scope for extra spending. How much spending is going to be a divisive issue for the "green coalition".
The leftist PIMR coalition is keen to spend it all on social programs, and restore considerable funding to hospitals that have been struggling under the draconian cuts of earlier this year. PIMR disagreed completely with running a surplus in a depression, and has been actively campaigning against it. However, under the terms of the coalition, they agreed to pass the budget bill. Now, without doubt, they will argue that it is time to spend more freely again.
Furthermore, the PIMR argue that a surplus in a depression only results in a more depressed economy, as argued by the renowned Christianan economist John Maynard Keynes, who argued that countries should spend their way out of economic depressions.
Similarly, the coalition's second largest member, the conservative Democratic Union Party, has been campaigning for substantially more funds for the country's infrastructure. Roads are in a state of disrepair, they argue, the rail system is cracking under the strain, and the power grid requires more spending on power stations. Without power, the economy cannot grow, because industry demands electricity.
However, the President will no doubt block coalition partner plans for a heavy-spending next few months. He is determined, he reminded reporters today, to continue a regime of strong budgetary surpluses, to "put something aside for a rainy day", such as a drop in government taxation income.
This may come at the cost of his own deputy, Finance Minister Gottlieb, who today stood dutifully permitting the President to bathe in the glory of their fiscal and economic victory. Gottlieb is considered too powerful by his cabinet colleagues, to influential over the President, and too ardently opposed to their spending out of the depression, plunging the government into an ever-increasing spiral of debt.
Gottlieb seems to understand this, but is doing nothing to prevent it. After less than a year in the top job, he appears to have aged considerably, the stress of the job telling on he and his family. Perhaps more importantly, pundits describe him as "too nice" for such a powerful position. "Too responsible". Too diligent and hard-working. Too forward-thinking. In short, he is a consummate technocrat -- not a consummate politician.
Still, the President is still holding the idea of early elections up his sleeve, and that may yet stave off any moves that could be perceived as unsympathetic by the electorate. And with the President's Democratic Reform Alliance party strengthened by the election, the President's hand may also be strengthened.
Then again, elections are tricky things -- it also may not.
Second quarter Rovens economic report