Econometrix Treasury Management MD George Glynos believes that 2009 will be a turn-around year where things start to bottom out for better times ahead.

“I think that there are basic eco- nomic principles that have been lost by policymakers in the past year. At the core people need to remember that an economy is an aggregation of households and businesses and, ultimately, the eco-nomy cannot do what the household and business cannot do. If a household has got itself too heavily in debt, at some point in time, things need to be normalised,” Glynos told a Sapoa/IPD South African Property Index launch, last week, in Johannesburg.

He added that owing to the credit crunch, the world was now in a process of significant normalisation, but that ‘risks abound

”. Despite, the high debt incurred world- wide, the policymakers are getting themselves deeper into debt to try to resolve the existing debt crisis.”

Glynos noted that there was a consumption-driven gross domestic product (GDP) expansion in the US, which led to the global economic meltdown.

” “This led to a massive deleveraging that materialised in the US and the UK owing to the equity extraction out of mortgages and people using their houses as an automatic teller machine.”

He pointed out that in terms of growth output, it was expected that South Africa would have a shallow recession, the country’s resilience driven by offshore demand in manufacturing and mining.

“Thankfully, we have a number of sports tournaments in the next 12 months that will help to shield the South African economy. We are fortunate that most projects that are in progress are gaining traction. “There is a lot of follow-through in the rest of the economy taking place, unlike the US and the UK, which are now beginning to try to boost their GDP growth.”

The local money markets have continued to operate without much disruption and the banking institutions have become conservative and have re-evaluated risks, thanks to an asset deflation and the recently implemented National Credit Act.

“There is no doubt that this year is going to be tough, but we are better placed to weather the storm than most countries and the recovery is only anticipated in 2010,” concludes Glynos