Economy: Small signs of hope
The SA economy has endured several severe economic shocks in the past few years: a labour shock, a commodities shock, an electricity shock, and on top of everything, the worst drought in 55 years. At last, however, there is a sense among economists that the business cycle is bottoming out and that SA will enjoy relatively better growth and lower inflation next year, maybe even an interest rate cut in the second half — if the promised rains come. A summer with good rains is essential for increasing food supply and tempering food inflation, which has been the driving force behind the CPI target breach for much of this year. Historically, SA’s business cycle has bottomed when inflation has peaked. Last month, the Reserve Bank revised down SA’s expected inflation trajectory considerably. It now expects inflation to peak in the fourth quarter of this year at 6.7% (compared with 7.1% previously) and to return sustainably within the target range earlier than before, in the second quarter o...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.