http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.14Change: -0.15
R/$ = 12.05Change: -0.20
Au 1200.03 $/ozChange: -6.12
Pt 1139.50 $/ozChange: -16.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 16, 2012

SA should revisit monetary policy to address economic imbalances

Back
Johannesburg|Africa|Mining|Pan African Investment|Research Services|Africa|China|India|South Africa|Electricity Costs|Manufacturing|Manufacturing Sector|Media Conference|Policy Tools|Products|Services|Infrastructure|Iraj Abedian
|Africa|Mining||Africa||Manufacturing|Products|Services|Infrastructure|
johannesburg|africa-company|mining|pan-african-investment|research-services|africa|china|india|south-africa|electricity-costs|manufacturing|manufacturing-sector|media-conference|policy-tools|products|services|infrastructure|iraj-abedian
© Reuse this



Policymakers in South Africa should use a set of policy tools such as macro-prudential regulation, capital controls and exchange rate bands to create macro-financial stability, the Manufacturing Circle stated in its second-quarter bulletin, published on Thursday.

Iraj Abedian, the CEO of Pan-African Investment and Research Services, which compiled the document, told a media conference, in Johannesburg, that the bulletin indicated that the global economy would remain on a trajectory of considerable structural adjustment during the foreseeable future. Subsequently, the volatility of emerging market currencies was likely to continue if, and for as long as, these currencies remained within a freely floating regime.

“Therefore, the structural nature of the change in the economy implies that economic policy in general, and monetary policy in particular, should be revisited accordingly to address imbalances,” the document read.

South Africa’s volatile exchange rate and the increased threat of a global recession had led to a debate regarding an additional mandate for monetary policy.

“Its being argued that monetary authorities in advanced economies should also target asset prices in addition to consumer prices, while in emerging economies the exchange rate has been cited as an additional target for monetary policy, besides price stability,” the document said.

It suggested that the South African Reserve Bank (SARB) should consider adding to its mandate of maintaining low inflation an implicit intervention in the foreign exchange market to minimise the volatility of the rand exchange rate.

Additional to the 3% to 6% inflation target range, a “currency band” of between R8.20 and R8.60 per dollar is proposed as a “working guide” for the SARB in its conduct of monetary and exchange rate policies.

Abedian said the survey results also revealed that business confidence in the manufacturing sector was fragile during the second quarter, weighed down by input costs that remained elevated.

During the second quarter an increase to 43% was recorded in the perception of business conditions, varying from ‘poor’ to ‘fragile’, up form 33% in the first quarter.

In line with this trend, the proportion of surveyed firms considering business conditions to be ‘stable’ reached 33%, down from 45% in the first quarter.

Many respondents advanced that high labour, fuel and electricity costs negated the manufacturing sector’s endeavours to bolster its competitiveness.

However, Abedian said domestic sales outperformed export sales during the quarter, with the share of respondents that recorded positive growth in the value of domestic sales climbing to 70%, up from 66% during the first quarter.

On the contrary, surveyed firms which posted positive growth in export sales value declined from 71% in the first quarter, to 70% in the second half.

Meanwhile, the manufacturing sector shed 44 000 jobs during the quarter, an improvement from the 67 000 recorded in the previous quarter. Abedian said losses were spurred by, among others, increasing volumes of cheap imports, automation and the reduction in the number of contract staff, as new orders from export markets plummet.

WHAT’S AHEAD

Survey participants put forward that, in addition to high input costs, the continued influx of cheap imports from China and India, muted domestic and international demand conditions and the poor performance of the mining sector, among others, would be determining factors in the sector’s outlook.

Abedian added that the report had identified the potential for the government’s preferential procurement programme to stimulate the manufacturing sector’s performance, and the implementation of the government’s infrastructure investment expenditure drive, as key factors that could stimulate the South African manufacturing sector going forward.

The report contains responses from a total of 67 CEOs from small to large-sized manufacturing companies in South Africa, covering a revenue base of between R300-million and R10-billion and representing a wide range of sectors from basic metals and fabricated metal products, to textiles and clothing.

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Two influential US senators, central to the so-called ‘chicken war’, have announced their intention to pursue amendments to the African Growth and Opportunity Act (Agoa) to secure greater access for US poultry into the SA market. “We believe passionately in Agoa’s...
The Independent Communications Authority of South Africa (Icasa) on Friday published the findings of a discussion document on South Africa’s television and radio local content environment. Icasa last year requested industry input as it reviewed and revamped...
Buying the catering unit of cash-strapped state airline South African Airways (SAA) could work for Bidvest Group, its chief executive said on Friday. SAA is considering selling some of its units including its inflight and airport lounge catering business, Air Chefs,...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
SMART DISTRIBUTION Providing funds to introduce smart grid technologies in the absence of a clearly defined strategy will not result in the desired outcome
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96