Evan Pickworth

Governor of the South African Reserve Bank Tito Mboweni said on Wednesday evening that South Africa is facing a critical shortage of specialist skills in a number of fields, most especially in the important financial and economic field. However, he added it is pleasing to see some institutions were getting involved to help develop the skills base.

The South African Chamber of Business (Sacob) said on Monday it aims to build a truly non-racial, viable movement and that its aim of unity was achievable. The chamber was announcing the appointment of Dr Kwandiwe Kondlo as general manager. It has been without a CEO or general manager for about 18 months.

After reaching its highest level since August 2003 of 6% year-on-year, core inflation in South Africa dropped to 5,7% in June, but analysts said on Wednesday this does not change underlying concerns, and interest rates are still likely to rise. Core inflation excludes volatile changes in food prices, municipal rates and monetary policy.

South Africa’s Minister of Trade and Industry, Mandisi Mpahlwa, speaking during the current South African-Italian Business Forum, said that he would not like foreigners to fear black economic empowerment (BEE), but rather that they understand the economic imperative underlying it.

The South African Chamber of Business’s (Sacob) business confidence index (BCI) has declined further to 99,1 in June from 100,2 in May and 101,9 in April, Sacob data on Thursday showed. The index had edged up to 101,9 in April after declining to 99,5 in March, and this came after it had dipped to 101,5 in January.

A properly implemented social-security system can benefit South Africa even more than it has Chile, Dr José Piñera — former presidential candidate and architect of Chile’s highly successful social-security system — said on Thursday. He said the spectre of bankrupt, government-run social-security systems is haunting the world.

South African money market rates are currently close to factoring in a full chance of a rate hike of 50 basis points in June. In a speech earlier in the month the central bank governor, Tito Mboweni, sounded hawkish as he highlighted risks to the inflation outlook.

With the South African economy expected to continue to grow slightly above potential this year, underlying inflationary pressures persist and the risk of higher rates remains skewed to the upside, say leading global economic analysts Moody’s Economy.com.

The rand has broadly stabilised and this is a much better level for the currency to be at, according to Professor Ben Smit, director of the Bureau for Economic Research (BER), who was speaking during a conference on Thursday morning."It is relatively stable within a relatively broad band," said Smit.

The dip in South Africa’s manufacturing production growth to 5,2% year-on-year (y/y) in March from 7,2% in February is still above the 2006 average of 4,8% y/y. Volume growth was at just 4,5% in December last year and the growth in 2007 continues to reflect strong growth.

Nominal house-price growth of 15,5% year-on-year was recorded in April from a revised 15,7% in March, according to the latest Absa house-price index. This brings the average price of a house in the survey to R911 800 in April. On a month-on-month basis, nominal price growth declined further to 0,9% in April.

Persistently high oil prices could cause higher inflationary expectations to become more entrenched, thus increasing the probability of a further tightening of monetary policy, said South African Reserve Bank (SARB) Governor Tito Mboweni on Friday morning.

While South Africa’s trade deficit widened further in March, there are continuing signs of improved export performance, analysts said on Monday. According to the South African Revenue Service on Monday, South Africa’s trade deficit widened by a further R2,75-billion in March, similar to February’s deficit of R2,66-billion.

South Africa’s latest pricing reports point to sustained inflation pressures and the risk of higher interest rates in 2007, according to international analysts <i>Moody’s Economy.com</i>. "Worryingly, core inflation, which excludes the price of certain foods, jumped to 4,9% year-on-year in March from 3,9% the month prior," it says.

After substantial revisions to South Africa’s quarterly employment data, the country’s economy is "at least" R110-billion larger than originally thought, a leading economist says. "It is 90% or more likely that the economy will increase by at least R110-billion, which amounts to around a 6,5% change," says T-Sec economist Mike Schussler.

While South African bonds have strengthened marginally during the past week, market analysts say further strength is "unlikely" as the market awaits the outcome of Thursday’s key rates decision. Bonds strengthened marginally on the week, with the yields on both the R153 and R157 government bonds falling by seven basis points.

While electricity consumption in South Africa continues to grow strongly, growth in production has ultimately been constrained by capacity problems, analysts said on Tuesday. February’s year-on-year growth in electricity consumption was unchanged from January’s growth at 5,1%.

Household credit extension by banks is up 81% between January 2004 and September 2006 to R680-billion, a report mandated by the National Credit Regulator (NCR) has found. Gabriel Davel, CEO of the NCR, notes that there are indications of important changes in the credit market behaviour.

While South Africa’s large trade deficit in January of R11,9-billion was in part due to seasonal factors, underlying trade conditions are probably set to get worse unless industrial-sector exports improve considerably, according to analysts. Once again the monthly trade balance shifted strongly into negative territory in January.

South African GDP growth for the fourth quarter of 2006 on a quarter-on-quarter, seasonally adjusted, annualised basis at 5,6% is the highest rate of quarterly growth in 10 quarters, and could have been even more impressive had it not been for the poor performance of certain sectors.

Mark Mobius, managing director of Franklin Templeton Investments, said on Friday during a whistle-stop visit to South Africa that the reason for the strong growth seen in China and India was because of a high savings rate, and that this was a key reason for South Africa to improve its savings rate.