SOUTH AFRICA has yet again left its interest rates unchanged. It did not come as a surprise but still prompts our compliments to the continued stance the South African Reserve Bank (SARB) has to take. The inflationary risks are more prominent than ever ogling the ever rising petrol price but also smirking about the slap on ESKOM’s wrists, who now have to raise their money somewhere else but on the back of drained consumers. We wonder, what that will do to the Renewable Energy Procurement Programme (REIPPPP)….?
Anyway, back to the interest rate, which – as far as the Repo Rate is concerned – remains at 5.0%, translating to 8,5% prime lending rate. (Ever wondered why you pay more than 20% for your credit card? Just count the floors of the latest Nedbank Building!)
The weaker Rand is the main culprit that is threatening to push the inflation rate – even only temporarily – out of the “safe” corridor between 3% and 6%. South Africa’s trade balance is currently on recreational holiday, the exports are increasing due to a heightened competitiveness of South African products on the international markets and – as a direct consequence – imported luxury goods are getting more expensive by the day. Still enjoying your Italian Coffee, German Technology and Indonesian fruits??
But domestic growth is – finally – sending out positive signs. We might be closing this financial year with more than 2.7% economic growth, which is a start for implementing the National Development Plan and to create 11 million job opportunities. For the moment the unemployment rate is jittery…but just edged below the 25.0% mark….again, its all a start, which is more than most of the European countries may report these days!
So, hang in there SA Tigers, we are NOT the weakest link in the BRIC wall, just buy local for now and enjoy the sun 😉