Get more Mail & Guardian
Subscribe or Login

SA recovery seen this year, says Reserve Bank

South Africa’s economy may come out of recession later this year, lifted by better manufacturing performance and a rebound abroad, the South African Reserve Bank’s deputy governor says.

Africa’s biggest economy fell into its first recession in 17 years this year and suffered its third consecutive contraction in the second quarter.

However, the second quarter fall was less severe than the previous three months and there are signs that South African factories, hardest hit by a global downturn, may be on the mend.

”Based on the composite leading business indicator, which has been increasing for the last few months, we may emerge from recession later this year,” Daniel Mminele told a seminar in Istanbul on Sunday.

”Like in other parts of the world, there is uncertainty as to the strength of the recovery we are going to see.”

Manufacturing appeared to recovering and businesses and consumers were more optimistic, Mminele said according to a written copy of his speech.

Analysts expect a series of interest-rate cuts this year and an expansionary fiscal policy to propel the economy back to growth in 2010 after a 2% decline for 2009.

The purchasing managers index, which measures manufacturing activity, hit a 16-month high of 48 in September. The leap from 39,3 was the second-biggest in the index’s 10-year history but is below the 50 mark, signalling the sector is still shrinking.

A factory and mining slump was the main driver in dragging the economy into recession and a recovery could lead to growth.

Mminele reiterated the view of the rates-setting policy committee — which left the repo rate at 7% last month — that the risks to the inflation outlook were evenly balanced.

He said the central bank was not overly worried about the impact of expansionary fiscal policy on inflation, as this was suitable for the current global and local economic conditions.

”Taking cognisance of the global financial and economic environment, and domestic developments with regard to growth, monetary policy will remain primarily focused on inflation management,” Mminele said.

Consumer inflation has slowed this year, but at 6,4% is still above the bank’s 3% to 6% target. A 5% drop in fuel costs this week should help bring it into line. — Reuters

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

Fears of violence persist a year after the murder of...

The court battle to stop coal mining in rural KwaZulu-Natal has heightened the sense of danger among environmental activists

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

More top stories

Kenya’s beach boys fall into sex tourism, trafficking

In the face of their families’ poverty, young men, persuaded by the prospect of wealth or education, travel to Europe with their older female sponsors only to be trafficked for sex

High court reinstates Umgeni Water board

The high court has ruled that the dissolution of the water entity’s board by Minister Lindiwe Sisulu was unfair and unprocedural

Mkhize throws the book at the Special Investigating Unit

It’s a long shot at political redemption for the former health minister and, more pressingly, a bid to avert criminal charges
Advertising

press releases

Loading latest Press Releases…
×