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Send  Print  Share  RSS  Twitter  11 Nov 2010

BER Sees Better GDP

 

Somerset West, Nov 11 (I-Net Bridge) - The Bureau for Economic Research (BER) of
Stellenbosch University sees cause for modest optimism in the trends they see
during the next 12 months.

According to the bureau's senior economist, Hugo Pienaar, 2011 could see
GDP growth in South Africa slightly better than in 2010, "although at this
stage," he said at the bureau's annual conference on Thursday, "any improvement
is expected to be marginal to 3.4%."

"Looking to 2012, GDP growth is expected to revert back towards 4%."

Pienaar added that growth is unlikely to return to the 5% environment
witnessed between 2004 and 2007 for the next number of years.

In the meantime the rate of price inflation should remain contained for
the rest of this year, set to average 4.3%. The view for 2011 is down sharply
from the 5.7% projected in July.

Pienaar said: "Consumer inflation is projected to accelerate further to
5.7% 2012 as the cumulative impact of large electricity tariff hikes and
projected GDP growth closer to SA's potential growth rate push up price
pressures."

All the same the bureau has revised its forecast made at the beginning of
October that there would be no increase in the repo rate this month.

"More recent events (including further job losses in 2010 Q3, the
continued rand strength versus the US dollar, and the explicit focus on
accommodative monetary policy in the government's growth path initiative) have
tilted the scales towards another 50bps reduction," he said.

He forecast that the repo rate will remain fairly stable at current lows
for a year until a gradual tightening begins in late 2011, projected to carry on
through 2012.

Looking at the strength of the rand, the bureau now forecasts that the
currency will average around 7.50 to the dollar in 2011 Q4, against the previous
forecast of 8.45/$. The expected rate in the final quarter of 2012 will be just
above 8.00/$.

End

I-Net Bridge, Tel: +27-21-403-3991, newsdesk@inet.co.za

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