ECONOMY: Reserve Bank Needs a Miracle
Recent Gauteng Business News
Rate hikes are inevitable and, in our opinion, the Reserve Bank is trying to buy some time. The entire constellation of stars will have to line up to enable us to escape more rapid punishment. Can Minister Nene find funds for Eskom and placate the rating agencies? We similarly see inflation trending lower in the first quarter of 2015 but remain concerned by recent exchange rate movements. Certainly the European Central Bank’s recently launched Targeted Long-Term Refinancing Operation will negate some of the curtailment in global liquidity as the Fed tapers but the window for our adjustment process is narrow. We have been maintaining for quite some time that growth this year will not exceed 1.5% and have to ask where the impetus for growth of 2.8% next year will come from? Export growth of 7.4% in the first seven months of the year – compared to import growth of 9.4% over the same period – is woefully inadequate to compress the current account deficit. Weaker commodity prices are not helping our cause.
While we broadly concur with the South African Reserve Bank’s assessment of local operating conditions as feeble at best, we remain concerned that they are hoping for a miracle, says Luke Doig, Senior Economist, Credit Guarantee Insurance Corporation
Business News Sector Tags: Economy|