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Global economy showing slow growth, but SA lacks growth driver

29 July 2014 | General

While global economic growth is slow, but expecting improvements through to 2015, the South African economy is caught in a low-level stagflationary bind. This is according to Rian le Roux, Chief Economist at Old Mutual Investment Group, who says that meaningful policy reforms are necessary to raise both the growth and employment potential and that partial reforms are unlikely to drag SA out of the low growth and employment trap.

SARB MPC escapes the ‘stagflationary’ vice-grip by appeasing both sides of the equation

18 July 2014 | General

SA GDP growth is under severe downward pressure due to various well known factors. The Monetary Policy Committee (MPC) is very sensitive to this and thus did everything they could not to hike rates. By only hiking 0.25% they hope not to hamper economic growth.

The rate hike widely expected

18 July 2014 | General

The rate hike of 25 basis points was fairly widely expected despite the fact that the economic growth forecast was reduced significantly from 2.1% to 1.7% for the year, along with lower longer term forecasts, since the last Monetary Policy Committee (MPC) meeting. The South Africa Reserve Bank also clearly stated that the lack of economic growth needs to be addressed by implementing the National Development Plan (NDP), and that there is therefore not much the MPC can do to save the growth rate in South Africa at this point.