Explore the Category

Interest rates and the battle of stagflation

17 June 2014 | General

No central banker, especially one who has inflation targeting as its main objective, ever likes to hear the word stagflation. This is unfortunately the harsh reality currently facing the South African economy. The latest CPI inflation release is above the 6% target limit, and the most recent GDP data has shown that the economy contracted by 0.6% in the first quarter of 2014. This is the worst position for any central banker, as raising interest rates should successfully contain inflation but at the cost of potentially throwing the economy into a recession. On the other hand, by cutting interest rates and stimulating the fragile SA consumer, the South African Reserve Bank (SARB) should succeed in reviving the growth outlook, but at the even greater cost of letting inflation spiral out of control. It should, therefore, come as no surprise that the SARB has decided not to adjust the repo rate at its last two meetings.

National Treasury has reason to fear Friday 13 June

11 June 2014 | General

With two ratings agencies due to announce their reviews of the country’s ratings on Friday, it’s not superstition that will be making those working in the National Treasury nervous.

Is South Africa headed for a recession?

11 June 2014 | General

South Africa’s economy contracted in the first quarter by -0.6%. The protracted strike in the platinum sector shoulders a large part of the blame, and even if the strike ends soon, it could still take up to three months for the platinum mines to get return to full operations. Manufacturing also contracted, and while other sectors grew positively in the first quarter, they displaying a weakening trend (with the exception of construction).

SA’s economy lagging behind the globe

10 June 2014 | General

While South Africa’s economy contracted in the first quarter, so far second quarter data have hardly been encouraging. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), sales of new vehicles fell by 9.2% year-on-year in May. There was a sharp decline in exports due to the discontinuation of a specific car model which could lead to a further blow to the trade deficit, but NAAMSA expects vehicle exports to improve in the second half of the year.

quick poll

Question

If you had to hazard a guess, when do you reckon the COFI Bill will be signed into law?

Answer

2026, as promised 2027 looks more likely Impossible to say More consultation needed

View the Results