In assessing the current economic outlook in SA, while there is undisputable evidence of a serious and rapid slowdown in economic and business activity in 2008, the latest growth figures reassures Busa that the overall growth outlook remains positive. Although a more realistic appraisal of the state of the economy will come when the growth statistics for the 3Q and 4Q 2008 become available later this year, the 2Q 2008 growth performance once again confirms that a recession in SA is unlikely.
Although the bulk of the focus has recently been on the sharp decline in consumer spending, Busa says its evaluation of SA's economic prospects is based on the still positive outlook for agriculture this year, as well as the apparent greater reliability in electricity supply in the months ahead. The improved outlook on the oil price/inflation front - and related factors - in the medium term also suggests the possibility that, although inflation may worsen in the months ahead, interest rates may now have peaked in SA. If so, there is the potential for interest rates to begin to decline in about mid-2009.
These prospects are also underpinned by the continued high level of capital investment, especially the R500 billion infrastructural investment planned over the next three years. While 2008 remains a tough year for many businesspeople and consumers, on present economic evidence Busa now sees economic growth in SA of not less than 3% this year - which is nonetheless well below the 5% achieved in 2007. Given the uncertainties in both the global and economic environments, all efforts must be made to espouse confidence-building policies in the interests of longer term sustainable growth and employment.
