ECONOMY: Glimmer Of Hope On Horizon
Recent Western Cape Business News
May’s liquidation statistics as released by Stats SA yesterday reveal a 35.7% year-on-year jump, bringing the year-to-date total to 1686 or 2.8% above the level seen in the first five months of 2009. This provides ample evidence of the severity of the economic crisis experienced last year.
Credit Guarantee’s threatening losses (or overdue advised accounts by its policyholders) have fallen 28.4% in number and 21.9% in value in the first six months of this year compared to the first half of 2009.
“It is heartening that this improvement appears to be gathering momentum,” says Luke Doig, Senior Economist at Credit Guarantee Insurance Corporation. “Significantly too, actual claims paid, albeit still at very high levels, also appear to be ameliorating quite strongly following the nadir in economic conditions reached last year. We remain hopeful that this improving trend in potential claims is further corroboration of an improvement in overall business conditions which in turn will lead to an eventual decline in business failures.”
Certainly challenges remain - some confidence indicators are beginning to plateau out while a double dip global recession would threaten exports of key commodities and other manufactures.
“However, if our claims gauge is correct as a leading indicator, a possible 50 basis points cut in interest rates next month, together with a 15cents per litre cut in fuel prices next week, may yet provide an impulse to overall demand while also assisting to improve current business cashflows,” says Doig.
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