ECONOMY: Economic Prospects Continue to Improve
Recent Western Cape Business News
South Africa’s economic prospects continue to improve in the wake of the recent recession. This is directly attributed to trade with dynamic emerging economies, particularly China, India and Brazil that continue to fuel global growth.
The South African economy will recover, however this improvement is expected to be gradual, over three to five years. One of the recovery factors is GDP having shown an increase in the fourth quarter of 2011, coming in at 3,2% quarter-on-quarter at a seasonally adjusted annual rate.
This was on the back of a weaker, still-recovering year for South Africa in 2010. Coface South Africa projects a (GDP) growth of 2,8 percent in 2012 and 4,4 percent GDP growth in 2013.
Consumer spending proved remarkably resilient in 2011 and was particularly so in the fourth quarter of 2011. It was reflected in the sterling performance of the wholesale, retail and motor trade sectors.
The noted increase in output shown by eight out of ten sub-sectors of manufacturing for February 2012 (Stats SA) was well above expectations. There was also a strong improvement in employment for this sector.
January 2012 saw CPI inflation increase marginally to 6,3% from 6,1% year-on-year. Coface expects inflation to remain around 6,0% for the remainder of 2012. This means it is unlikely for the South African Reserve bank (SARB) to change interest rates for the year and because there is still market pressure emanating from the week Europen economy.
Due to weak demand from the Eurozone, it could mean that export growth will slow, but it is currently being kept strong by a weaker rand and increasing fixed investments.
In 2011 exports increased 21% while imports rose 36% compared to 2010. This clearly shows that there is stabilisation in export momentum, but also a rise in import growth.
Coface anticipates that consumer expenditure figures, reflected in the Quarterly bulletin, will continue to be robust. Although GDP growth is expected to be marginal, industrial markets will show decreased growth especially in the manufacturing sector. Coface believes only very few manufacturing concerns will show marginal growth.
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