Helmo Preuss

South Africa’s February 2005 producer price index (PPI) is expected to remain at January’s 5,5% year-on-year (y/y) increase. According to an I-Net Bridge survey of economists, the range is from 4,9% y/y to 5,9% y/y. The optimists expect the stronger rand to have kept factory gate prices subdued, while the pessimists believe rising oil and other commodity prices will lead to higher producer prices.

The Pebble Bed Modular Reactor’s (PBMR) fuel division announced on Wednesday that it had awarded a design contract worth R10,5-million to a South African design house, Thermtron Projects, in a crucial second step in the PBMR fuel manufacturing technology, to prove sustainability on an industrial scale.

The Department of Minerals and Energy could implement a retail petrol price cut of about 15 cents per litre (c/l) on March 1, given recent trends in both the rand exchange rate and oil prices, reversing the 14c/l increase implemented this month. The retail petrol price is adjusted monthly on the first Wednesday of the month.

The Department of Minerals and Energy could implement a retail petrol-price cut of about 12 cents per litre (c/l) on March 1, given recent trends in both the rand exchange rate and oil prices. The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period’s over- or under-recovery.

Strong South African government revenue growth should allow Minister of Finance Trevor Manuel to cut personal taxes by about R20-billion when he announces the 2006/07 Budget on Wednesday February 15. But economists are divided on whether the tax relief will come in the form of adjusting brackets or a reduction in the top marginal tax rate.

All economists surveyed by I-Net Bridge expect no change in interest rates at the end of the two-day meeting of the South African Reserve Bank’s monetary policy committee (MPC) meeting, which started on Wednesday morning. This is the 13th consecutive MPC meeting at which the majority of economists have forecast no cut in rates.

Business leaders and economists are very upbeat in their expectations for South Africa’s general economic prospects in years to come, the Bureau for Market Research said on Monday. A panel of 13 economists expects an average growth rate in excess of 3% per annum between 2005 and 2010 and growth of 3,6% per annum for the period 2011 to 2025.

All economists surveyed by I-Net Bridge expect no change in interest rates at the end of the two-day meeting of the South African Reserve Bank’s monetary policy committee (MPC). This is the 13th consecutive MPC meeting at which the majority of economists have forecast no cut in rates.

The National Treasury is unlikely to deviate from the path it has pursued since 1995, one of gradually dismantling exchange controls in a phased and responsible manner, despite speculation that the government may opt for a "big bang" approach to lifting remaining exchange-control regulations, Brait economist Colen Garrow said on Friday.

The majority of economists expect no change in monetary policy in South Africa in 2006, but there are economists who are forecasting cuts, and those who are looking for increases. A no-change scenario is what the majority of economists forecast for 2004 and 2005.

Foreign direct investment (FDI) is likely to keep the rand more stable in 2006, as it did in 2005, compared with previous years, economists surveyed by I-Net Bridge said. The average annual forecast for 2006 is from R6 to R7 per dollar with a median forecast of R6,50.

South Africa’s November 2005 producer price index (PPI) is expected to ease to a 4,1% year-on-year (y/y) increase from 4,2% y/y in October and 4,6% y/y in September. According to an I-Net Bridge survey of economists, the range is from 3,7% y/y to 4,3% y/y. The expected easing is due to a reduction in the price of imported crude oil.

The South African residential property market continues to be buoyant, although the growth in house prices has eased substantially from last year’s peak, Standard Bank economists Elna Moolman and Gina Schoeman said in the latest residential
property gauge. The economists noted that the macroeconomic environment and consumers’ sound balance sheets remain supportive of a firm housing market.

Rather than worry about how to get growth going, people should be worrying how to make the most of a South African economy that is "pumping", South African Reserve Bank Governor Tito Mboweni said on Monday. He was speaking at a media conference following a business round table with the government.

The unemployment rate for youths aged between 16 and 25 was 52% in South Africa, while in the Western Cape it was 49%, compared with a national average for all ages of 26.5%, Finance Minister Trevor Manuel said on Thursday evening in Cape Town.

A deliberate policy of depreciating the rand could have undesirable effects, South African Reserve Bank Governor Tito Mboweni told the Bureau for Economic Research conference in Somerset West on Wednesday. "One of the calls frequently made is for deliberate depreciation of the exchange value of the rand," Mboweni said.

South African house prices increased by 15,8% year-on-year in October 2005, from a 17,6% increase in September, according to South African commercial bank Absa’s monthly house-price index released on Thursday. This was the lowest year-on-year increase since August 2002, when it was 15,9%.

The Department of Minerals and Energy is likely to announce a cut of 22 cents per litre cut in the retail petrol price for the month of December, if the rand exchange rate and international petroleum prices remain at Friday’s levels. The retail petrol price is adjusted monthly on the first Wednesday of the month.

South Africa slipped one position to 42nd in the <i>Global Competitiveness Report</i> released on Wednesday by the World Economic Forum, but this was only because two new countries, Qatar (19) and Kuwait (33), came in above it. In an unchanged universe, South Africa would have moved up one position to 40th.

The South African government is on track to achieve its first ever fiscal year surplus, if the trends established in the first four months remain intact. In the first four months, revenue rose by 21,2% year-on-year (y/y), while expenditure increased by 12,2% y/y.

South Africa’s April 2005 leading economic indicator, which is compiled by the South African Reserve Bank (SARB), rose by 1,8% month-on-month (m/m) after a 1% m/m increase in March, but was still below the December 2004 level. Economists generally see four or more consecutive monthly declines as a warning signal of weaker growth ahead.

The total number of liquidations increased by 1,1% year-on-year (y/y) to 265 in May 2005 after rising by 14,3% y/y to 279 in April 2005, Statistics South Africa said on Thursday. The comparisons are distorted to a certain extent by the fact that Easter this year took place in March compared with April last year.

The annual general household survey showed a "better" South Africa in 2004 compared with 2002 according to a host of measures such as access to safe water, cellphone usage and education, based on an analysis of the data compiled by Statistics South Africa.