EDITORIAL: Curiouser and curiouser
The anomalous nature of our economic present is extraordinary
SA is an economic anomaly. In theory, as the rand declines at least three things should happen simultaneously: exports should increase, economic growth should rise and inflation should rise. If the rand declines, exports should by definition increase because they will seem cheaper to foreigners. By the same token, imports should decrease because for locals they should be more expensive. Economic growth should follow because a decrease in the exchange rate should mean the country becomes more competitive. And inflation should increase because of the "cost-push" factors that result from an increase in the price of inputs such as labour and raw materials. Yet none of these things is happening. Why? The anomalous nature of our economic present is extraordinary, and not only for the reasons above. The whole point about having a floating currency is that in times of economic stress, a fluctuating currency acts as a kind of shock absorber. A currency decline might make foreign travel more ...
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