Economy not so bad

2016-07-14 06:00

Despite the International Monetary Fund revising South Africa’s growth forecast to 0.1%, the situation is not so bad, suggested economist and senior industry analyst at FNB, Jason Muscat.

Muscat said that during a press briefing in Rosebank on Wednesday. FNB’s Bureau of Economic Research also recently released the consumer confidence index, which fell two points to -11. Private sector investment fell by 7%, which has implications for job creation, said Muscat.

He said consumers are taking strain, in an environment with growing unemployment. He also said consumers are tightening their budgets, and spending less, especially on durable goods.

Interest rates have peaked and inflation is trending down, which could be good news for consumers. “Inflation is expected to peak at 7.1% for the last quarter of the year.”

The current account deficit is 6% of GDP. Figures from FNB show that there are about 75 000 new businesses created each month.

In the first two years, however, 40% of new businesses are closed, he said.

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