The economy didn’t just turn around in the final quarter of last year, it took off sprinting. That real 3.2% growth (measured quarter-on-quarter, on annualised and seasonable adjusted figures) compares to economic shrinkage in the previous three quarters that ranged from 7.4% to 0.9%. Nor did that growth come entirely from public spending; manufacturing and mining have contributed nicely. Basically, the factories are smoking, the mine trucks are running and, with any luck, employment should follow right behind.
The difference between the roughly 2.5% growth that sober economists were expecting and the actual growth rate is the chances of one last cut in interest rates. It used to be a remote possibility. Now it is unthinkable. In fact, the odds of a rate increase in the next three months just jumped to “probable”. Which will, of course, have Cosatu marching in the streets and mortgage payers grumbling.
Just this once Cosatu may turn out to be right. Growth expectations for the rest of the year are heavily influenced by the World Cup. Basically, if foreigners flood into the country and spend money like nobody’s business for a month, then we’re at bigger risk of an overheating economy and in greater need of (slightly) higher interest rates to prevent a dip in the second half of 2010. If spending during June is more muted, then we’ll need a corresponding lower interest rate to keep the momentum going.
The problem, of course, is that nobody knows. There are some pretty smart guesses going around, but they’ll only be proven right or wrong in September and October. By which time the Reserve Bank’s Monetary Policy Committee will already be either praised or vilified for decisions made in March and April on the basis of best guesses.
By Phillip de Wet
Read the entire Stats SA report here.
Photo: A worker inspects cars at Nissan’s manufacturing plant in Rosslyn, outside Pretoria, September 11, 2009. REUTERS/Siphiwe Sibeko
Want to watch Richard Poplak’s audition for SA’s Got Talent?
Who doesn’t? Alas, it was removed by the host site for prolific swearing*... Now that we’ve got your attention, we thought we’d take the opportunity to talk to you about the small matter of book burning and freedom of speech.
Since its release, Pieter-Louis Myburgh’s book Gangster State, has sparked numerous fascist-like behavior from certain members of the public (and the State). There have been planned book burnings, disrupted launches and Ace Magashule has openly called him a liar. And just to say thanks, a R10m defamation suit has been lodged against the author.
Pieter-Louis Myburgh is our latest Scorpio Investigative journalist recruit and we’re not going to let him and his crucial book be silenced. When the Cape Town launch was postponed, Maverick Insider stepped in and relocated it to a secure location so that Pieter-Louis’ revelations could be heard by the public. If we’ve learnt one thing over the past ten years it is this: when anyone tries to infringe on our constitutional rights, we have to fight back. Every day, our journalists are uncovering more details and evidence of State Capture and its various reincarnations. The rot is deep and the threats, like this recent one to freedom of speech, are real. You can support the cause by becoming an Insider and help free the speech that can make a difference.
*No video of Richard Poplak auditioning for SA’s Got Talent actually exists. Unless it does and we don’t know about it please send it through.
The movie Cloudy with a Chance of Meatballs is titled It’s Raining Falafel in Israel.