Economy 2010: the outlook for SA

By admin
18 January 2010

After enduring a tough 2009 most South Africans want to know how the economy is likely to shape up this year. Will we have to tighten our belts even more or can we breathe a little easier?

Officially the recession is over but that doesn’t mean we’re back to where we were before the economic slump, Efficient Group economist Dawie Roodt says. “Things were bad in 2009 and this year will be better by comparison but this doesn’t mean we’re out of the woods.”

While there will be more room to manoeuvre this year you should use January to draw up a budget that ignores optimistic forecasts. “This will force you to live within your means so you won’t be caught out by economic changes as in the past,” Roodt says.

Mike Schüssler of Economists.co.za and some other analysts forecast interest rate hikes in the second half of the year - so think twice before buying on credit or splashing out on luxuries. “Why upgrade your cellphone if there’s nothing wrong with your current one?”

It’s okay to buy on credit if the purchase will save you money in the long run, Schüssler adds. “A solar geyser system, for instance, is a major expense to start with but in the long run can save you plenty.”

If you can, invest in residential property. Christie Viljoen, an economist at NKC Independent Economists, says the market’s two-year slump could soon be over. “The house market will slowly but surely improve. Much will depend on how keen banks are to grant mortgages.”

Although the economic outlook is good compared with last year, analysts recommend caution. “It sounds obvious and like a cliché but live within your means; don’t buy on credit to make life easier,” Investec Asset Management director Jeremy Gardiner says. “You’ll probably be in a better financial space this year but use the extra flexibility for things you really need.”

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