R/€ = 14.59
R/$ = 10.54
Au 1301.37 $/oz
Pt 1437.50 $/oz
Nov 02, 2007
SA will hit 'magical' 6% growth by 2010 – analystBack
Johannesburg|South Africa|United States|Food|Food Price Inflation|Growth Domestic Product|Cyril Ramaphosa|Jacob Zuma|John Loos|Thabo Mbeki|Tito Mboweni|Tokyo Sexwale|Trevor Manuel|Sima C-PIX DV-6400 Digital Camera
© Reuse this The spate of interest rate hikes over the past several months could have peaked, offering South African consumers something of a breather, while the country is on its way to reaching "that magical mark" of 6% economic growth in 2010, an economist said on Friday.
Further good news was that inflation could begin to slow, as current levels were not sustainable, FNB property economist John Loos said.
"There are signs that the global food price inflation will drop," he told a Johannesburg conference. "We have seen a decline in the past couple of months."
"That's big, because about 26% of our consumer price inflation index (CPIX) basket is food," Loos highlighted.
He said that there could still be some more upward movement in the CPIX, but that its peak was not far off.
"The Reserve Bank have finished with their interest rate hiking," Loos put forward. "By December's meeting, they will probably have decided that they have done enough, and will hold interest rates where they are for a while."
This would be comforting news to the big-spending South Africans who had been slapped with three successive rate hikes this year, in Reserve Bank governor Tito Mboweni's determined efforts to curb inflation, and encourage saving.
However, the Reserve Bank had sprung surprises on the public before, and could do so again.
Dollar due to head further downThe dollar, which has taken a big knock since the subprime mortgage crisis swept the US, has still got its eyes to the ground, which bodes well for a stronger rand, Loos stated.
"The dollar had a few years of weakness ahead," he said. Traditionally, there was an inverse correlation between the strength of the US dollar and the rand.
The US had a current account deficit of some 6% of its growth domestic product, which had far deeper implications than South Africa's current account deficit, owing to the sheer size of the US economy, said Loos.
"The dollar's weakening cycle is far from complete, it has got some way to go."
"We've got some good times ahead for the rand's strength," he commented.
Current account deficit no danger yetSouth Africa's current account deficit is not a big danger yet, but it will become a problem in a couple of years time if it continues, Loos went on to say.
Finance Minister Trevor Manuel did not express much concern about the country's yawning trade gap when he presented his medium-term budget speech to Parliament on Tuesday.
Economic growthLoos was sanguine on South Africa's growth prospects, predicting that economic expansion could reach 6,1% in 2010, which was in line with government targets.
"I believe we are going to head for 6% economic growth," he said, adding that growth would average at 4,6% this year.
He pegged growth at 4,9% in 2008, and climbing to 5,5% in the following year.
It would be in 2010 that he believed South Africa would reach "that magical" mark of 6,1% economic growth, added Loos.
"Sustaining that for 10 or 20 years is another thing, though," he said.
Loos said that one shouldn't overemphasise the influence of politics on economic performance. The ruling African National Congress was gearing up for the election of its new leader at the end of the year, which had caused uncertainty over the effect that a change of leadership could have on economic policies.
Potential candidates for the position included incumbent Thabo Mbeki, Jacob Zuma, Tokyo Sexwale and Cyril Ramaphosa.
Edited by: Mariaan Webb© Reuse this Comment Guidelines
Other Trade News
Recent Research Reports
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of 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 steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
This Week's Magazine
Updated 32 minutes ago The power and water sector will come together in May to discuss challenges and celebrate successes at the annual African Utility Week and Clean Power Africa in Cape Town. More than 5 000 power and water professionals, including utility heads from Nigeria, Uganda,...
There is enough water in South Africa to supply communities and the economy, even if some activities may be constrained, such as agriculture in the Limpopo, says National Planning Commission commissioner Mike Muller. Muller was also the director-general from 1997...
South African antenna designer and producer Poynting and provider of professional products, system integration and implementation and commissioning services for the broadcast and telecommunications markets in South Africa, African Union Communications (Aucom),...
Industrial automation giant Festo has been displaying some of the its ongoing research projects and latest automation developments and products at the Hannover industrial fair from April 7 to 11, as part of its Integrated Automation – The Next Steps theme. The...
South African retail companies are responding to the way in which e-commerce is changing their engagement model with customers by improving customer engagement channels and order fulfilment intelligence, says industrial and retail software company JDA Europe, Middle...