MANUAL HAS REASON TO BE CHEERFUL

And here is Friday 4ths post.

Well it certainly looks good on paper doesn't it and in all fairness to all concerned, the economy is looking particularly rosy at the moment. However all of that being said, the fact still remains that there are some 4 000 000 odd souls who do not have work and many many more who live below the poverty line - this is not acceptable! More needs to be done to revisit, those who are in desperate need! I am not saying that the Government is not doing enough, I am saying more needs to be done, by both the Government and the Private Sector. A great deal of this will come from the Private Sector in the next four or so years as the new BEE scorecards are realized. But is it enough. . .Is it ever enough and how do we combat it? I suspect that each and every one of us has to play our own part! Let's all "pay it forward".

Manuel has reason to be cheerful

January 7, 2007

By Mzwandile Jacks

South Africa's finance minister, Trevor Manuel, delivering his medium-term budget late last year, was cock-a-hoop as he outlined the country's economic record and outlook and plans for 2007. "The policy choices we made over a decade ago are bearing fruit and we are in the midst of the longest sustained economic expansion," said Manuel. Extravagant brags aside, the minister had reason to be cheerful. In its 12 years in power, the past three years have seen South Africa's arguably centre-right government preside over what many believe has been steady economic growth.

It is the country's performance on jobs that has attracted most attention. Manuel said the robust economic growth had created more than 1 million jobs in the past three years. According to figures released by the International Monetary Fund (IMF) late last year, employment grew 5.7 percent in the year to September 2005. Public finances are sound and the government has been able to rebuild its international reserves. Government debts have been brought down to 34.1 percent of the gross domestic product in the financial year 2005/06. Although the value of the rand began to fall last year, affecting the value of exports, foreign direct investment more than covered any deficit this caused.

Strong economic activity and firm enforcement of policies as well as increased tax revenue were instrumental in easing debt, said the IMF. Though the Economist Intelligence Unit claims prospects for the economy remain unchanged for this year, some experts are not totally certain about this. Rian le Roux, the chief economist at Old Mutual Asset Managers, recently said global developments had raised the question of whether the outlook for South Africa was in the process of turning "considerably less rosy". Le Roux said on the global front, policy makers faced a daunting task of blunting inflation risks through policy tightening, without causing a sharp global downturn. "However, even though the risks that things could go wrong have risen, we remain confident that the present global expansion will continue into 2007, albeit at a more moderate pace than has been the case for the past few years."

Le Roux said in South Africa, growth had become increasingly unbalanced as domestic demand continued to boom and a strong rand weighed on producers, particularly exporters. Though he believes it is questionable whether the extent of the currency and interest rate adjustment to date is sufficient to meaningfully improve the foreign trade shortfall, he thought guarding against becoming too pessimistic about the country's current account situation was the way to go. "With South Africa firmly back in the international arena, our economic fundamentals generally healthy and the economy growing at a fairly robust pace, we should be able to continue to attract fairly sizeable amounts of capital inflows," said Le Roux.

On the domestic inflation and monetary policy front, Le Roux said there could be no denying that the forward-looking inflation risks had increased. He said the extent to which interest rates were likely to rise further depended largely on global developments, especially how far and how fast global central banks raise rates during the second half of the year. "While we remain optimistic that a repeat of the previous strong upcycles in local rates can be avoided, the risk that it may not must be factored in by investors, businesses and consumers," said Le Roux. Given the increased uncertainty, he said consumers were well advised to lower their reliance on credit-based spending. He warned that indebted consumers might be hard hit should a more vicious interest rate cycle materialise than was expected. He said that although a short-term setback, higher interest rates and some growth, slowdown was not out of the question. This, he said, could well reinforce a medium- to long-term positive outlook for the economy because "an early strike against inflation may go a long way in keeping inflation in check at the lower levels of recent years, while a softer rand is also welcome from a longer-term growth perspective". - Mzwandile Jacks