Economy News: THE South African economy is likely to grow by 2.1% this year, an improvement from last year’s estimated 1.4%, supported by higher consumer spending, less strikes, and the benefits of lower oil prices. The economy is seen expanding by 2.9% next year. Interest rates are likely to remain on hold for the better part of this year and only be hiked by 25 basis points in September as the Reserve Bank continues its gradual rate-hiking cycle. Barclays Africa senior economist Peter Worthington said at a briefing on Thursday that their economic growth forecast for this year would have been higher had stable power supply been a guarantee. Power utility Eskom has been struggling to meet demand, often resorting to forced power outages. Mr Worthington said more outages were possible because there is no significant new generating capacity likely to come on line very quickly except possibly one unit of Medupi but that is not enough to rescue us. Unit 6 at Medupi is expected to start adding to the power grid in the second half of the year. Barclays Africa expected inflation to average 3.8% this year from an estimated 6.1% average last year assuming an oil price of about $50 a barrel. Lower oil prices have led to significant petrol price cuts in recent months and slowing inflation. Inflation has been coming down in recent months, easing the pressure on consumer incomes. Mr Worthington was also confident that government would meet its budget deficit targets because of on-track revenue collections to date and the government sticking to its expenditure containment principles.
Posted on: Mon, 19 Jan 2015 09:11:32 +0000
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