CONSTRUCTION INDUSTRY
How a rate cut could build on sector's budding recovery
Construction activity remains constrained ‘because of high interest rates and policy uncertainty’
SA needs an interest rate cut to kick-start the economy and stimulate the constrained construction industry, says economist Roelof Botha. Though the country recently slipped into technical recession, the construction sector has shown signs of recovery, according to the Afrimat construction and building index for the second quarter of 2018. Speaking after the release of the index on Thursday, Botha said the recovery could accelerate with lower interest rates. "Since the end of 2016, the consumer price index [CPI] has declined by 190 basis points. "In that period, all we have had are two 25 basis-point cuts in interest rates. "So we are 1.4 percentage points behind the curve. The industry and the economy need a little bit of stimulation via a rate cut," he said. Policy uncertainty He said it was also imperative for the country to resolve the uncertainty about land reform policy "pragmatically". The latest Afrimat index, a composite measurement of the level of activity in the building ...
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