SA needs another rate cut – poll

2009-09-11 12:01

ONE more interest rate cut is needed for South Africa to shake off the recession, according to the latest monthly Sake24 and BoE Private Clients provincial barometers released today.

The study provides a view of the private-sector economic health of four provinces – Gauteng, Western Cape, Eastern Cape and Free State.

The barometers for July showed that the full effect of lower interest rates, which have dropped five percentage points since December last year, still had to filter through the economy and this was expected to take some months.

Darryl Owen, chief investment officer at BoE Private Clients, said all the signs were there to justify the need for one more interest rate cut of 50 basis points later this year – including below average growth expectations for next year.

The latest indicators showed that the Gauteng and Eastern Cape barometers were down 13.3% and 15.3% respectively from July last year. However, the indexes were only 3.2% and 0.7% down from June.

Economist Mike Schüssler, the developer of the barometers, said the declines could be attributed to the struggling vehicle and steel industries in the two provinces.

The Free State barometer was 5.4% lower year-on-year, but only 1.4% down from June, the study found.

The Western Cape barometer showed the same movement, with 9.7% and 2.9% respectively.

“It is clear that month-to-month data show that the recession is near its end. The year-on-year figures still look very bad, but I still believe we are past the worst,” Schüssler said.

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