CAPE ECONOMY: Nedbank Forecasts Modest Growth For 2011
Recent Western Cape Business News
With the 2011/2012 Budget being announced soon, how our economy is faring after the global financial meltdown of 2008 is a hot topic currently. Nedbank’s economic unit is forecasting a modest improvement in economic growth for 2011 compared to 2010 and sees interest rates moving sideways for the next twelve months.
This view is shared by Goolam Kader, Divisional Executive Nedbank Business Banking Cape.
“Whilst growth will be modest, we will still be outperforming most first world economies and this growth will be underpinned by continued capital expansion by government together with export growth in the commodity markets. Locally our consumers are showing signs of recovery, with debt redemption as a percentage of disposable income reflecting continued improvement, now at 78% compared to 83% at the height of the storm,” says Kader.
Consumers are breathing again but increases in transport costs, education, services and electricity have, to a large degree, negated the benefits of the current reduced interest rates – the lowest in 35 years.
Kader adds that business clients in the Cape have not escaped this contraction in the economy and the strong Rand has placed an added burden on our exporters.
“In the wine and fruit industry particularly we have seen export revenues reduced by between 10% to 15%, which has forced business to look for alternative markets to procure an increase in volumes and to make up for the loss of revenues due to the strong currency. Exports to our main trading partners such as the UK and Europe have also been affected by the contraction of those economies, and exporters are now turning towards the East and Asia for new markets.
With energy and food security being a major challenge to the world, farming remains one of the cornerstones of our business focus in the Cape and whilst we acknowledge the challenges, we also see great opportunities in this sector, supported by great expertise, the quality and consistency of product standards and our fertile soils and favourable climate,” he says.
Kader notes that Nedbank Business Banking clients have taken stringent measures on all fronts to protect their margins, including in some instances, right sizing of their businesses.
“This is certainly the time to look for new opportunities and we have seen an increase in mergers and acquisitions and entrepreneurs taking advantage of the strong Rand to expand their technology and production capabilities. And we at Nedbank Business Banking are supporting our clients to grow their businesses and to position themselves for the next growth phase and assist them to stay competitive in these volatile economic circumstances.
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