Credit Guarantee’s Luke Doig isn’t taking a cavalier attitudeto recent news on the country’s current account deficit or interest rate hikes. He says both businesses and Consumers aught to get ready for a TIGHT SQUEEZE! In fact, he thinks that if things get bad enough, retrenchment might be on the cards for some employees. So the most recent economic developments are going to hurt across the board – business-wise. It’s relative consensus that although growth will continue, it will most definitely slow down, Doig is forecasting 4% which would be the slowest we could go in 5yrs and this is infrastructure driven as opposed to consumer driven, as has been the case. So what can you do – well one thing that’s stressed is if you have a business and debtors books, make sure you don’t keep your eye off the ball – if you haven’t considered debt insurance you could be one of the many businesses that are expected to fail within the next several months.
Archive for December 12th, 2007
Sirens
December 12, 2007
SA’s Current Acount Deficit in Perspective
December 12, 2007
As I reported earlier, our, current account deficit has increased to 8.1% of GDP.So how will this affect our lives? Nedbank’s Dennis Dykes doesn’t see any immediate effect on the plebs as interest rate hikes would. It’s mostly reflective of how there is more investing rather than saving – mainly in imports which exceed our exports. And while this might be a huge number – certainly not a number that the economist were foreseeing (a 3rd up from what was expected) in relation to world economies he doesn’t seem to think it extraordinary or unusual. Investors aren’t panicking but rather understand that this is how things are running economically – he made an example of some eastern European countries running at a deficit of 15%. In light of 2010, one can see where a lot of the cash is going to – so the country is investing in the future and is hoping that exports will match in years to come thus setting a balance. While our exports are priced well, the threat of the US economy sliding into a recession could upset things. So what are the life lines that we’re hoping will be thrown to us? Well i) lower oils price, ii) more direct foreign investment and pretty deals like the Standard Bank one. Crossing thumbs for BHP!
DEFINE
DEFICIT: you know when u see a negative to the number on your bank statement… and you sooo wish it was a positive
GDP: gross domestic product (total economic activity/sum of all value added)
IMPORTS: what foreigners sell to us (overseas products onto our shores)
EXPORTS: what we sell to foreigners (our products overseas)
