Money SA economy
The Bureau for Economic Research (BER) estimates South Africa's Gross Domestic Product (GDP) will be adjusted downwards to 3.1 percent for 2010.
"For 2010 as a whole we have made a downward adjustment (from 3.4 percent in April to 3.1 percent) in the GDP growth forecast," said the Bureau for Economic Research (BER) in its economic prospects statement on Tuesday.
According to the BER, two thirds of the 2010 growth is forecast to be the result of an end to the huge inventory decline that was witnessed in 2009.
"One of the implications of this growth mix is that the underlying conditions in the economy may remain weaker than what would normally be characteristic of a 3.1% real GDP growth environment," said BER senior economist Hugo Pienaar. As a result, no job growth is forecast for 2010.
Growth in gross domestic expenditure is expected to ease to 4 percent from 4.7 percent in 2011. "The 2011 GDP growth acceleration stems mainly from a smaller negative net export contribution - given the uncertain global outlook, there is a risk that this may not materialise," said the BER.
The BER said inflation data confirmed that the Consumer Price Index (CPI) remained on a downward trajectory. CPI eased to 4.6 percent (a new four year old low) year on year in May compared to the 4.8 percent recorded in April.
The BER's view of the repo rate, which the central bank decided to keep unchanged at 6.5 percent at its meeting last week, remains that there will be no further monetary easing at the MPC's next meeting in September. This was despite argument for a rate cut due to benign inflation, Rand strength and the uncertainty relating to the sustainability of global growth.
The Bureau expects the rand to average R7.75 in quarter four of 2010 before it weakens to average R8.45 in the last quarter of 2011. - BuaNews
