Category Archives: economic growth

July 12, 2011

SA unions have a ‘death wish’, says economist

By *media update*

As employees in the chemicals sector joined metalworkers in their strike on Monday, there were fears that petrol stations could run out of fuel. 

Colen Garrow, economist at international investment group Brait, told the Mail & Guardian on Monday that while there may be widespread shortages, it depended on how long the strike lasted.

The countrywide strike in the engineering sector entered its second week on Sunday.

“At the very most at this stage I would predict bottlenecks at petrol stations as motorists rush to fill their tanks,” Garrow said.

The effect of the strike on the South African economy was already taking hold, with third-quarter GDP growth predictions being revised downwards.

Chief economist at Investment Solutions Chris Hart told the M&G that while the bulk of the strain caused by the recession had been weathered by the South African economy, the current industrial action would have a negative effect.

“The global economy is showing signs of slowing and the threats to our continued recovery are being exacerbated by the strike action. We have done all we can in terms of lowering interest rates and widening the budget deficit and this could drag us back down,” Hart said.

This was echoed by economist Richard Downing, who believed organised labour must realise that increased wages will lead to further unemployment, saying it was as if the unions had a “death wish”.

“The economy is not that resilient and business just can’t afford these increases. Unions must know what is affordable and grapple with the facts. If these increases go through unemployment will increase. It’s a simple equation,” said Downing.

The Chemical, Energy, Paper, Printing, Wood, and Allied Workers’ Union (Ceppwawu) and General Industries Workers’ Union of South Africa (Giwusa) last week indicated that their members would embark on the strike from Monday.

The unions were joining the National Union of Metalworkers of South Africa (Numsa), the Metal and Electrical Workers’ Union (Mewusa), United Association of South Africa (Uasa), Solidarity and the South African Equity Workers’ Association (Saewa).

Article via Mail&Guardian – click here to view original article

Leave a comment | posted in 3rd world, economic growth, household, labour

July 9, 2011

Labour

By *media update*

One dead, six injured, nine arrested in countrywide strikes

A worker died, six were injured, and nine arrested during the country-wide strikes this week.

The engineering, gold, chemicals, and coal sectors were negotiating with employers for higher wages.

During the engineering sector strike a worker died when he was hit by a car in Germiston, National Union of Metalworkers of SA (Numsa) spokesman Castro Ngobese said on Friday.

Two people were injured when a supervisor at an engineering company in Krugersdorp shot at striking protesters who were assaulting working employees on Friday, Gauteng police said.

The supervisor and the two protesters, who were taken to hospital, were arrested.

Four Numsa members were also injured after police fired rubber bullets during a strike in Krugersdorp, west of Johannesburg on Thursday.

There were also claims that police had harassed, intimidated, and shot at strikers in Bellville and Germiston.

Numsa and the Congress of SA Trade Unions (Cosatu) condemned the “police brutality” and called on Police Minister Nathi Mthethwa and National Police Commissioner Bheki Cele to take “drastic action” against the policemen.

However, the Steel and Engineering Industries’ Federation of SA (Seifsa) said pockets of strikers were moving from company to company to find and intimidate non-strikers, damaging property, and trespassing.

Ekurhuleni metro police said nine Numsa members were arrested for public violence in Germiston on Thursday.

Constable Mashudu Phatela said they were allegedly burning tyres and throwing stones at passing motorists.

Over 117,000 workers in the metal and engineering sector downed tools on Monday in pursuit of between 10 and 13 percent wage increases. Employers were offering seven percent.

Workers were striking in Johannesburg, Port Elizabeth, East London, and Cape Town. Mpumalanga and KwaZulu-Natal workers held demonstrations on Monday, while workers in the Free State and Northern Cape started their work stoppage on Tuesday.

Numsa, which represents about 120,000 workers, was joined by five other trade unions — the Chemical, Energy, Paper, Printing, Wood, and Allied Workers’ Union (Ceppwawu), the Metal and Electrical Workers’ Union (Mewusa), United Association of SA (Uasa), Solidarity, and the SA Equity Workers’ Association (Saewa).

Cosatu president Sdumo Dlamini on Wednesday said the engineering sector strike was only the beginning of workers’ fight for a living wage.

Economist Chris Hart on Friday said strikes over wage negotiations were becoming routine, which suggested there was policy and regulation failure.

The violence associated with South Africa’s strikes also had an implication.

“The violence suggests that there is a lack of control which is not good for investment,” he said.

“Labour instability does nothing for job creation; if anything it damages it from an investment point of view.”

Two “victims” arose from non-productivity during strikes. The customer, who ended up paying more, and the unemployed, he said.

The protests by workers also reduced South Africa’s competitiveness with the rest of world.

The solution was productive negotiations between unions and employers, Hart said.

“…but we [South Africa] are not there yet.”

About 5000 Ceppwawu members went on strike on Tuesday over a salary dispute.

The union wanted a 13 percent salary increase on the grounds of rising daily costs.

The gold and coal sectors declared disputes with their employees over wage negotiations.

The Chamber of Mines was negotiating on behalf of employers in both sectors.

Workers in the gold sector threatened to go on strike next week if wage negotiations with the chamber came to a deadlock.

The National Union of Mineworker (NUM), Uasa, and Solidarity were representing unionised employees working for chamber member companies such as AngloGold Ashanti, Harmony Gold, and Goldfields.

The NUM and Uasa hoped to raise the chamber’s offer from 4.2 to 14 percent. Solidarity members wanted 12 percent.

Solidarity said it submitted the lower figure in light of the current production environment and 4.6 percent consumer price inflation.

It felt the figure, although still above inflation, would help retain skilled employees.

Although inflation was at 4.6 percent, workers faced hefty electricity and rates increases, food price increases, and the imminent introduction of road tolls.

The chamber recently said production in the gold mining industry had consistently declined and it faced pressure from the high costs of electricity, water, and fuel.

Chamber negotiator Elize Strydom said it had increased its offer to five percent for the lowest paid employees and 4.5 percent for the rest.

The coal sector started salary talks on Thursday.

Coal companies have offered a 4.5 percent increase for the lowest category employees and 4.2 percent for all others.

A full-blown strike in the petroleum and pharmaceuticals sector will kick off on Monday, Ceppwawu said.

About 70,000 workers are expected to go on strike.

This would include members of the General Industries Workers’ Union of SA (Giwusa) and the Tissue and Allied Union.

Workers wanted a wage increase of 11 to 13 percent across the board and a minimum wage of R6000 a month.

Article via The New Age – click here to see original article

 

Leave a comment | posted in 3rd world, economic growth, household, labour, media update

June 22, 2011

Big fat Greek debt headache

By *media update*

If Greek sovereign debt collapses nobody will be collecting souvenirs from a fall that could be bigger than the Berlin Wall…

MICHAEL ETTERSHANK

According to Chris Hart from Investment Solutions the biggest event in Europe since the fall of the Berlin Wall is going to be the dismantling of the welfare state with the collapse of Greek sovereign debt.

 

 

 

 

“European governments have made promises beyond what the wealth of their taxpayers can deliver,” said Mr Hart in an interview on Summit TV. “The people are now asking their governments to meet their promises.”

 

 

 

 

It’s a well documented fact the Greeks invented the word democracy, so perhaps there is an irony that it’s now come home to haunt them.

 

 

 

 

“The troubles in Greece can in no small part be attributed to the politics of Europe – the problem is that the Greek electorate do not want to participate in austerity measures,” said Mr Hart.

 

 

 

 

German voters don’t really want to bail out their fellow Europeans based on perceptions of a diluted work ethic to the south.

 

 

 

 

“In Greece it’s almost a political death wish is you support the austerity measures that are needed,” said Mr Hart, “but if you support the bail-out packages in Germany you’re also dead politically.”

 

 

 

 

What this means is the external support to keep Greece afloat is falling away, and so is internal support.

 

 

 

 

 

 

According to Mr Hart it’s in the nature of politics that elections are auctions to see “who can dish out the taxpayers’ money better than the next one?” Mr Hart added that voters in a democracy would not be likely to vote for reduced benefits. “Once people are on the public teat you can’t get them off.”

 

 

 

 

The result of all this democracy was that where sovereign debt was once set at risk free rates, government debt was now starting to look like the epicentre of risk. Mr Hart said the next big thing was going to be where to find a safe asset?

 

 

 

 

Mr Hart said that the current negotiations were only likely to “kick the can further down the road” but that Armageddon could be just around the corner: “Why is this Armageddon? It’s not just debt that the Greek government has borrowed from the Greek population – the German, French and Italian banks all own this debt,” said Mr Hart.

 

 

 

 

He said that US banks don’t own a lot of the European debt, but credit default swaps have been issued by the Americans. “They’re also at risk because of the potential fallout from a Greek default,” said Mr Hart, adding that this was not like a Pakistan default where the debt might be owed to the Pakistani people by their own government.

 

 

 

 

 

 

Mr Hart also warned the problems were not just limited to Greece and Europe: “The US is following the same path with US Federal Reserve and Congress spending out of control – they are also heading for a day of reckoning”.

 

 

 

 

“It’s like a pleasure boat at the top of Vic Falls – you’re not too close but you don’t notice you’re drifting. Then down you go. It’s very sudden.”

 

 

 

 

Asked about the potential effect of these global financial woes on South Africa Mr Hart said it was a question of better yield.

 

 

 

 

“We know the US will have zero yield for a long time to come like Japan,” said Mr Hart, adding that he suspected investment would still come in unless China started to slow down and the commodities story reversed which would be a risk to the rand, along with higher inflation and interest rates that would detract from growth.

 

 

Political brinkmanship would also be a feature of South Africa until the ANC electoral conference: “If there is any indication in 2012 that there is going to be mine and bank nationalisation and land grabs we would be setting ourselves up for having a generation long recession.”

Article via Business Day – click here for original article

Leave a comment | posted in 1st world, economic growth, household, inflation

June 9, 2011

Manufacturing production dismal in April

By *media update*

South African factory output grew 0,4% year-on-year in April which was far below analyst expectations

ALISTAIR ANDERSON & NICKOLAUS BAUER

Manufacturing production was shocking in April this year. It grew at 0,4% year-on-year and fell 3,7% month-on-month from March.

 

 

 

 

There was deep concern that the economic crises in Japan and Europe would seriously erode demand for local exports in the coming months. Europe buys about a third of SA’s exports, and is the biggest purchaser of its manufactured exports

 

 

 

 

Strength in the rand was expected to have a negative effect too, damaging the competitiveness of goods manufactured in SA.

 

 

 

 

“We expect a slight moderation in growth to 4% year on year but it is likely to be temporary,” Rand Merchant Bank economist Carmen Nel said last week when commenting on her forecast for the data.

 

 

 

 

Manufacturing was slow to recover relative from the recession to other sectors of the economy. Economists are also concerned about the lack of jobs created by the sector.

 

 

 

 

SA has a 25% official unemployment rate. It is trying to create 5-million jobs in 10 years.

 

 

 

 

 

 

 

 

 

 

The current figures are worrying to economists who believe in the current economic circumstances, various economic sectors – especially manufacturing should be performing better.

 

 

 

 

 

 

“Manufacturing was a bright spark in early GDp figures this year and the current figures don’t paint a good picture,” Chris Hart, cheif economist at Investment Solutions told Business Day.

 

 

 

 

“At this stage of the recovery we shoudl eb seeing overheating instead of contractions and the economy should be in an upward space,” Hart added.

 

 

 

 

 

 

 

 

Senior ABSA Capital economist Gina Schoeman also told Business Day the data signifies a possible change in thinking that interest rates will change in latter 2011.

 

 

 

 

 

 

 

 

“This doesn’t paint the picture of an economy that could handle a normalisation cycle in 2011,” Schoeman said.

Article via Business Day – click here for original article

Leave a comment | posted in development, economic growth, manufacturing

May 24, 2011

Close corporation liquidations rise in April

By *media update*

“Small businesses are critical to employment, and South Africa’s business regulators and Labour environment have become hostile. This makes doing business difficult” – Chris Hart

Though company liquidations within the first four months in 2011 decreased by 2,1%, close corporations liquidations increased by 5,8% (from 692 to 732), compared to the same period in 2010. This according to Stats SA’s April 2011 preliminary liquidations and insolvencies report.

Investment Solutions chief economist, Chris Hart says the economic recovery is mainly visible in bigger companies and small businesses continue to struggle.

“What you see on the stock exchange is completely different from what you see in your ‘mom and pop’ stores. We’re going through an economic recovery which is rooted only in big business as they have better access to credit application than smaller establishments,” says Hart.

“Small businesses are critical to employment, and South Africa’s business regulators and labour environment have become hostile. This makes doing business difficult,” says Hart

A 25,4% year-on-year decrease in the number of total liquidations was recorded for April 2011. According to Stats SA’s, company liquidations for three months ended April 2011 dropped by 7,3% (from 1096 to 1016) compared to April 2010.

Stats SA says there were less voluntary and compulsory liquidation in the three months leading to April 2011.

“The decline in the number of liquidations for the three months ended April 2011 was driven by lower figures reported in voluntary liquidations (from 1 037 to 962) and compulsory liquidations (from 59 to 54), at -7,2% and -8,5% respectively,” states Stats SA.

Financing, insurance, real estate and business services recorded the highest number of liquidations with 493 liquidations cases equivalent to 37,1% followed by wholesale and retail trade, catering and accommodation industry with 350 cases or 26,3%.

Insolvencies in the first quarter of 2011 decreased by 30,5%, from 836 to 581 compared to the corresponding period in 2010.

Article via FM.co.za – click here to see original article

Leave a comment | posted in business, economic growth, labour, unemployment

May 20, 2011

Gautrain is a catalyst for development: economist

By *media update*

Gautrain, the rapid transit rail commuter service that goes into full operation in just over a month, provides an economic backbone for Gauteng, SA’s wealthiest province, according to Chris Hart, economist at Investment Solutions.

Gautrain, which links Johannesburg, Pretoria and OR Tambo International Airport, will officially start to run its full operation from June 28.

Already, the multibillion-rand rapid rail commuter service is drawing interest from businesses, underscoring its potential for galvanising Gauteng’s economic activities.

Hart says Gautrain’s 10 stations would prove to be developmental hubs and add a new dimension to how cities are developed and designed.

Stations, he says, have increasingly become central points of urban planning, highlighting the Gautrain’s role as the “backbone of economic development”.

There are office and residential nodes around stations, which will ultimately create work opportunities.

Presently, the Gautrain commercially operates on the route linking Sandton and Oliver Tambo International Airport. Some feeder bus services are available.

It is clear that Gautrain’s ticketing has been priced to attract regular commuters, Hart says, adding that the rapid transit system will help speed up the movement of people around and between the major cities of Johannesburg and Pretoria.

The Bombela Concession Company, which will operate the Gautrain for the next 15 years, says there is interest in the Gautrain from businesses in Gauteng, some of whom are already utilising the current operational service to and from the airport.

Although Bombela does not have figures, it is keen to engage with businesses on Gautrain service offerings, it says.

The Gautrain has made its mark, in particular, when it comes to socioeconomic advancement, such as empowerment and job creation.

Black-owned businesses hold 25% shares in Bombela.

During construction, more than 5.08 billion rand was spent on procurement from, and sub-contracting to, black entities.

The Gauteng Management Agency, which is overseeing construction of the Gautrain on behalf of the provincial government, says 34,837 jobs were created for South African-based workers.

Unskilled staff and semi-skilled staff attended more than 15,080 courses to improve their skills levels, Gauteng Management Agency says.

But Hart poses a question, asking whether the Gautrain model would inspire the rejuvenation of Metrorail to also catalyse further development.

Metrorail is a national passenger rail service that is part of the Passenger Rail Agency of South Africa (Prasa).

Article via Business Live – click here to see original article

Leave a comment | posted in development, economic growth, media update

May 15, 2011

Wal-mart probe spooks foreign investors

By *media update*

Government intervention in local business transactions is creating the impression that SA is a difficult investment destination.

The Competition Tribunal this week heard arguments about Walmart’s planned 51% takeover of Massmart, after government intervention stalled the takeover process.

However, some policymakers and economists say it is relatively easy for overseas companies to invest.

Lionel October, the Department of Trade and Industry’s director-general, denied that government was making investment difficult.

“We welcome any investment which will expand domestic production and create jobs here. We don’t want investors to come in, close down SA plants and bring in imported products.”

October said the government had incentivised multinational vehicle makers to invest R12-billion in the country to produce cars. It also negotiated a deal with General Electric to manufacture in SA. “In two weeks’ time we have 60 Chinese companies coming to SA to assess opportunities.”

October said the benefits were not immediately obvious in the case of a retailer.

“The retailer can source from anywhere. That’s why America has such a big trade deficit. They use Chinese suppliers.

“What we want unashamedly to do is help domestic production. Whether you’re local or foreign doesn’t matter. The only condition we want is that Massmart will continue the practice of using SA suppliers and not shift elsewhere,” said October.

Stephen Gelb, economics professor at the University of Johannesburg, said it is easy for foreigners to enter SA.

“The SA policy framework is largely laissez faire regarding the entry of foreign firms.”

Gelb said policy interventions do not discriminate between domestic and foreign investors.

“No official approval is required except in a few sectors such as banking. Foreign investors are subject to the same laws and regulators as domestic investors.”

But Gelb questioned the use of competition authorities to screen foreign investment.

“They should be used to look at competition. If you use them to look at other things it undermines their credibility. We have an effective competition regime. We should be protecting that quality, not undermining it.”

Azar Jammine, economist at Econometrix, said SA could not afford negative perceptions created by the Walmart hearing.

“SA might not need foreign capital right now as money is still pouring into our equity and bond markets from abroad.

“But from a longer-term perspective the damaging perception becomes costly. The lion’s share of money coming in is of a portfolio investment kind and helps us survive, but it’s not creating jobs.”

Chris Hart, economist at Investment Solutions, said the apparent xenophobia to foreign capital can be costly for SA, especially when there is no “plan B” for economic growth and employment creation.

He said that given SA’s lack of savings, which would normally be used to pay for growth, meant the country desperately needs foreign investment.

Analysts warned against the risk of mixed messages should conditions be imposed on the Walmart deal.

“On the one hand the government keeps saying they want to attract foreign investment, but on the other hand they seem to be terrified of the implications of what that might mean,” said one.

Uncertainty is being created by having different rules for each attempted transaction by a foreign entity, said Neren Rau, CEO of the SA Chamber of Commerce and Industry.

Francois du Plessis, portfolio manager at Vega Capital, said if foreign companies encountered problems investing in SA they could turn to other emerging markets.

Du Plessis said that apart from the costs of undertaking a due diligence, preparations for a takeover also take up a lot of management time.

“I am sure someone like Andy Bond (former Walmart vice-president who represented the group at this week’s hearings) has 110 better things to do than sit here and explain why they want to invest in SA.”

Gelb said every foreign investment has costs and benefits for the economy – the big benefit for Walmart coming into SA would probably be consumer welfare.

Article via Business Live – click here for original article

Leave a comment | posted in economic growth, international, investment, politics

April 20, 2011

Zuma urges improved service delivery

By *media update*

Zuma tells delegates to jobs summit government needs to be at the centre of the growth drive in line with its vision of a developmental state.

SAM MKOKELI

POOR service delivery needed to be improved to place the government at the centre of SA’s economic development, President Jacob Zuma told a jobs summit in Pretoria yesterday.

The summit with labour federation leaders follows one held last month with business leaders, as the government tries to create consensus for its job-creation agenda. Its new growth path strategy has set a target of creating 5- million new jobs in a decade .

Mr Zuma’s emphasis on the state’s role in the economy was criticised yesterday in comment on his remarks by Chris Hart, chief strategist at Investment Solutions. He said it was crowding out private sector space to operate.

Mr Zuma told the labour summit that the government needed to be at the centre of the growth drive in line with its vision of a developmental state, which his administration was relying on to drive economic development in SA. He said the government’s plans were boosted by the turn of the economic tide since the 2009 recession. The economy expanded 4,4% in the last quarter of last year, compared to 2,7% in the third quarter.

The government’s focus in the coming years would be to stimulate SA’s productive capacity to boost job creation, Mr Zuma told the summit.

The developmental state would be built on the ethos of service delivery, of providing quality services to communities in urban and rural areas.

“It means teachers, nurses, policemen and women, municipal employees and all public servants must work diligently to provide services,” Mr Zuma said.

Mr Hart said he was worried because the government — which was failing in its core competence — was now venturing into the private sector.

“The activists who brought us freedom in 1994 deserve a lot of credit, but they are trying to drive jobs now, which is not their area of expertise,” he said.

The private sector was increasingly being cut out of the process of creating growth and jobs through legislation and policies that were hostile to business.

“Unfortunately, business and enterprise activity are the only sources of all wealth in a society. There are no exceptions,” said Mr Hart.

Congress of South African Trade Unions president Sdumo Dlamini said the summit was helpful in providing the opportunity for unions to influence government thinking.

Leave a comment | posted in development, economic growth, household

April 12, 2011

SA “not too small” to be BRICS member

By *media update*

The country is “not too small” to be a member of the BRICS (Brazil, Russia, India, China and lately South Africa) grouping, according to Dr Martyn Davies, CEO of consultancy Frontier Advisory.

“SA has the corporate muscle to compete with other economies in BRICS,” Davies said.

“We punch above our weight and yes, SA is a relatively small economy but look at the multinational corporations we’ve spawned such as SABMiller, Anglo American and Sasol amongst others.

“So when it comes to multinational corporations, we may even be ahead of other members of the grouping,” Davies added.

President Jacob Zuma – as well as other members of government – will on April 14 attend the BRICS summit at the Chinese resort of Sanya on the island off Hainan.

While warning that SA should not expect too much from the BRICS summit, Investment Solutions economist Chris Hart said that the grouping “could evolve into something significant over time for the country”.

It would help open links and focus people’s minds in terms of business opportunities, he added. “I strongly believe that our economic relationships with India and Brazil are way below what they could be.”

Last week, International Relations Minister Maite Nkoana-Mashabane, said that SA, as the newest member of BRICS, was “quite honoured and elated” to have been invited to join “this very, very, important global grouping”.

“We believe we belong in BRICS because to complete the grouping they needed a country on the African continent and we thought we were the right candidate.”

article courtesy of Business Live – please click here to see the original article

Leave a comment | posted in economic growth, media update

March 25, 2011

Rates remain unchanged at 5.5%

By *media update*

Pretoria – The Reserve Bank’s Monetary Policy Committee (MPC) has kept rates unchanged at 5.5 percent per annum in line with market expectation.

Reserve Bank Governor Gill Marcus on Thursday said since the previous meeting of the MPC in January, risks to the outlook for domestic inflation have increased on the upside, due mainly to cost push pressures.

The prognosis for domestic growth has improved with the recovery expected to be sustained. The Bank said household consumption expenditure has been the main driver of growth, while growth in fixed capital formation has remained weak.

“The MPC’s decision was in line with our expectations. The general economic recovery is still largely hesitant and inflation remains under control, although pressures are rising. We expect the MPC to keep interest rates unchanged throughout the year before tightening in the first quarter of 2012, but the risk of a rate hike in late 2011 has increased,” Nedbank economists said.

On Wednesday, Investment Solutions economist Chris Hart said the MPC would likely keep rates unchanged, its lowest in 30-years. “If the rand remains strong, there will be no need for a hike this year,” said Hart.

The MPC said the global recovery seems to have remained on track, but that the European debt crisis, rising oil prices – which are partly a result of geo-political events in North Africa and the Middle East, and the tsunami and earthquake hit Japan – may moderate the pace of recovery in the near term.

“The MPC is of the view that the risks to the inflation outlook are on the upside. The MPC has decided to keep the repurchase rate unchanged at 5.5 percent per annum for the time being,” said Marcus.

“The decision to hold rates steady was unanimous, given the huge uncertainties,” she said, refusing to be drawn on whether there is a rate hike possibility later in the year.

“We will not speculate. We will look at the data and decide accordingly,” she explained.

The central bank said that global inflation risks have also increased, particularly for emerging market economies.

Food price inflation, while still low, has been increasing. In February, it measured 3.5 percent and contributed 0.6 percentage points to the overall inflation outcome.

Petrol prices increased at a year-on-year rate of 12.3 per cent, while administered prices, excluding petrol, increased by 9.1 per cent.

The bank said the trajectory of the CPI forecast has changed since the last meeting, with inflation expected to remain within the target range over the whole forecast period.

Inflation is now expected to average 4.7 percent in 2011 and 5.7 percent in 2012. This is an upward adjustment of a half a percentage point for 2011/12.The upward adjustment is mainly due to revised assumptions regarding the international oil price over the forecast period.

Strong capital inflows to emerging markets last year have slowed down and in some instances reversed, with South Africa also experiencing net sales of bonds since November, and in the year to date, net sales of bonds and equities by non-residents amounting to R19.2 billion.

“Despite these net sales and the continued purchase of foreign exchange by the bank, the rand exchange rate has remained firm but volatile,” said Marcus.
The governor said the bank was not targeting the exchange rate. “It is of concern to us, but we can’t ignore the fact that it’s a dollar story too.”

The rand exchange rate is relatively unchanged since the previous meeting of the MPC, but has fluctuated between R6.80 and R7.33 per US dollar during this period.

Since the previous forecast, the bank expects Gross Domestic Product to average 3.7 and 3.9 percent in 2011 and 2012 respectively.

“These growth rates, while an improvement, are still too low to have a significant impact on the unemployment rate which measured 24,0 per cent in the fourth quarter of 2010,” said Marcus.

Since December 2008, the repo rate has been cut by 650 basis points.

article courtesy of 7th Spaces.com – please click here to see the original article

Leave a comment | posted in economic growth, media update, monetary policy

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