Wednesday, June 18, 2008

SA in for tough times

Tough days ahead indeed.

Notice how the reporter compares the “significant improvement from the meagre one percent yearly increase during whites-only rule”.

Obviously this is some blek-friendly reporter (AFP is renowned for employing twats) who forgets the sanctions and embargoes “the whites-only” government had to deal with whereas the apes in charge now had the doors flung open at them and only managed 3%!

Like they say, it is not the size of the tool that matters, it is what you do with it.

The ‘old’ SA built and maintained a First World infrastructure and look what the geniuses of today have managed to do to that with their “growth”.

Eskom is blamed which is the only factual thing he got right but he fails to point out who is to blame. Classic AFP rubbish reporting.

And Cosatu’s answer to everything – protest. Protest what? Lack of jobs? As if one can demand jobs.

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South Africa, the continent's economic powerhouse, is braced for a slowdown after a stretch of solid growth, as higher interest rates coupled with rising food and fuel costs are set to bite.

Growth in the first quarter measured 2.1 percent on a 12-month basis, down sharply from 5.3 percent in the last quarter of 2007, government statistics show.

The dip has been blamed on energy constraints which led to massive power cuts that forced mines and other industries to shut down. The country's economy has been growing at an average of three percent since the end of apartheid in 1994 -- a significant improvement from the meagre one percent yearly increase during whites-only rule.

But economists said Thursday's 50-basis-point increase of the key repo rate, bringing it to 12 percent, will hit economic growth and put further strain on consumers' pocketbooks. "I believe the interest rates will remain high for most of the year," said T-Sec economist Mike Schussler.

"Consumers are starting to tighten their belts and retail sales and vehicle sales are lower. House sales are slowing and prices are under pressure. These factors may contribute to a slowdown in the economy."

Banks have already announced that they will increase mortgage rates by 0.50 percent to 15.50 percent. Interest rates began shooting up in June 2006 and have gone up nine times by a cumulative 450 basis points.

Central Bank Governor Tito Mboweni has maintained that raising interest rates is the right tool to meet the bank's inflation target of between three and six percent -- a target not being met at present.

Consumers prices, measured by the consumer price index (CPI), leapt 10.4 percent on a 12-month basis in April and economists predict that inflation will not return to within the target range for about two years. "The central bank has revised its own inflation forecasts, now expecting that CPI will peak at 12 percent later this year, returning to target by third quarter of 2010," said Standard Chartered Bank economist Razia Khan.

"However these forecasts do not account for the possibility of a greater-than-inflation increase in electricity tariffs.

Although South Africa has backed away from an all-in-one go 53-percent hike in electricity prices, a sharp increase in electricity prices is nonetheless more probable than not."

With household debt at a record high 78 percent of disposable income, the majority of South Africans are likely to slump even further in debt, according to First National Bank (FNB) economist John Loos. Add to that escalating food and oil prices, as well as electricity, education and medical costs, and the future does not look bright, added Loos.

Fuel costs reached new highs this month when petrol went up to 9.96 rand a litre and diesel to 11 rand (1.36 dollars, 0.88 euros). Commuters have been hardest hit by fuel prices, with bus and taxi fares also on the rise. The impact is evident as well in the number of cars being repossessed by banks, with vehicle repossessions reportedly shooting up by 25 percent in the first two months of the year.

The Congress of South African Trade Unions (COSATU), the country's largest trade union federation, has threatened protests over the escalating cost of living. "Companies, especially small ones, will face crippling increases in their costs and thousands of jobs could be lost," said COSATU in a statement.

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