Quarterly Economic Bulletin released

By Staff Writer

Compare banks and save with Justmoney

Quarterly Economic Bulletin released

The South African Reserve Bank released its quarterly bulletin yesterday.

This was covered by most of the financial papers today. The bulletin itself can be read here. It delivered mixed messages and left analysts guessing how the Monetary Policy Committee (MPC) would decide regarding interest rates.

The bulletin noted the global crisis and falling confidence in the world economy as global growth projections were adjusted downwards. They noted that in the third quarter of 2008 the South African economy recorded the lowest quarterly growth in 10 years.

It also noted that real disposable household income had contracted, what this means is that we just don't have as much spending money as we used to. This has lead to a sales slowdown.

The bulletin was also concerned about our widening trade deficit and stated that portfolio investment was outward. This means that the big investors were taking their money out of South Africa. There was some concern that inflation was not going to turn around as quickly as expected although the new basket of goods would show inflation as being lower.

South African equity prices fell by more than 40% overall in the last quarter. The government however was in a good position to increase spending and would have no problem in financing this. The new basket for measuring inflation would also no longer include mortgage interest cost but would now include owners equivalent rent, this is what you could get if you rented out your house and will have a smoothing effect on short term repurchase rates.

Basically this will as the bulletin puts it, remove 'perverse short-term incentives to monetary policy-makers'.

Here is what the news outlets had to say. The Mail and Guardian focussed on the widening current account deficit due to a slower global economy and softer commodity prices.

Business Report looked at how the bulletin showed that consumers were being stressed, via the fall in household consumption noting that consumers cut back on big ticket items particularly cars.

They also looked at spending on durables and non-durables and the fall in new mortgage loans that were granted. They noted that this could also be an effect of the National Credit Act. They noted the government spending increase and also noted that the private sector spending increases were mainly in the transport and telecommunications industries.

They further noted that interest rates might be kept high in order to induce capital inflows from foreigners seeking higher interest rates.

iAfrica came with the headline 'SA rolls with the punches' noting that overall the economy grew by 4.3 percent year on year.

Bloomberg also covered this story focussing on the fact that consumer spending has dropped for the first time in a decade. Justmoney is sitting tight and waiting for the MPC decision tomorrow, but just about everybody is hoping for an interest rate cut to pick our economy up and increase lending and spending again.

 

Recent Articles

Featured Which one should you get first: life cover or a retirement annuity?

Financial planning can be a brain-racking process because it means making difficult decisions such as choosing the most suitable products for you. The one challenge faced by those who are financially constrained is which product to choose: life cover or a retirement annuity (RA).

Read more

Should you save or invest your money?

While saving means putting away cash for future use, investment involves purchasing assets which will yield good returns in the future.

Read more

Retirement annuities compared – pick the one for you

When selecting an RA you must know the type of annuity you are investing in. Retirement annuities are divided into two categories: traditional and new generation annuities.

Read more

Recent tax changes – how do they affect you?

In January this year, various amendments to the Taxation Laws Amendment Bill and the Tax Administration Act were announced. While some changes will benefit you, others could be to your disadvantage. Justmoney looks at how some of the recent changes will impact you.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Save R100 when you buy a tracker at Takealot

Price: R289
When: Daily
Where: Online

Pamper yourself and partner for less at Bakwena Day Spa

Price: From R999
When: Until 31 July
Where: Hartbeespoort

Pay only R35 for the new Nandos Boujee Bowl

Price: R35
When: Daily
Where: Nationwide