http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.90Change: -0.02
R/$ = 12.57Change: -0.01
Au 1096.00 $/ozChange: 0.65
Pt 986.00 $/ozChange: 3.00
 
 
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|Export|India|Mining|Pan African Investment|Research Services|Africa|China|South Africa|Electricity Costs|Manufacturing|Manufacturing Sector|Media Conference|Policy Tools|Products|Services|Infrastructure|Iraj Abedian
|Africa|Export|Mining||Africa||Manufacturing|Products|Services|Infrastructure|
johannesburg|africa-company|export|india|mining|pan-african-investment|research-services|africa|china|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
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Economy News
Updated 42 minutes ago Zimbabwe's tax collections were six% below target during the first half of the year while mining royalties and value added tax plunged, reflecting a struggling economy, the tax agency said on Wednesday. The southern African country's economy, where mining contributes...
Tourism Minister Derek Hanekom
Updated 5 hours ago Tourism Minister Derek Hanekom has told Talk Radio 702's John Robbie that Cabinet has appointed a task team to look into the damage being caused to tourism by tough new entry requirements imposed by Home Affairs Minister Malusi Gigaba. Hanekom said that he supported...
The Portfolio Committee on Energy on Tuesday welcomed the resignation of PetroSA chairperson Nonhlanhla Jiyane, but maintained that the entire PetroSA board should resign and be reconstituted, following months of financial mismanagement. Jiyane’s resignation had...
Article contains comments
Article contains comments
More
 
 
Latest News
Updated 1 hour 3 minutes ago Zimbabwe's tax collections were six% below target during the first half of the year while mining royalties and value added tax plunged, reflecting a struggling economy, the tax agency said on Wednesday. The southern African country's economy, where mining contributes...
Updated 1 hour 9 minutes ago Weak profit forecasts from Holcim and Lafarge weighed on the newly merged LafargeHolcim , the world's biggest cement maker, highlighting tough conditions that have sparked more consolidation across the sector. With investment on hold in much of the world due to an...
Rob Davies
Updated 1 hour 38 minutes ago Following what the Department of Trade and Industry (DTI) describes as “an extensive public consultation process”, the draft Promotion and Protection of Investment Bill – which government says will seek to promote inward investment, clarify the level of protection...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
Updated 2 hours 10 minutes ago Meyerton-based steel tank manufacturer Structa Technology is currently rolling out a water infrastructure build programme that supports local municipalities, water utilities, schools, hospitals and clinics.
Alternative funding models could be expected to begin coming to the fore in South Africa’s renewable-energy sector as the market becomes more competitive and domestic development finance institutions (DFIs) begin scaling back their direct involvement in projects....
DIMITRI MARKOULIDES An innovation champion must involve employees in innovation projects and keep them updated to enable them to support and drive innovation and create the future of the business
An innovation champion course that trains executives to manage innovation in their organisations aims to help companies grow revenue streams and tap new markets, says business change management consultancy BMGI South Africa innovation practice lead Dimitri...
Future digital workplaces will require employees to continuously learn new “literacies”, including new media, information and technical skills, to help their company thrive and spur personal growth. Information technology (IT) research firm Gartner, thus, suggests...
Only 25% of large construction projects surveyed in KPMG’s Global Construction Project Owner’s Survey, released in June, were concluded on time and within budget over the last three years. “Every project owner wants predictability when it comes to large projects, and...
 
 
 
 
 
 
 
 
 
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