From the Desk of the MD - September 2019
Category From the Desk of the MD
The news that South Africa's GDP has rebounded from a decline in the first quarter of the year and is now growing once again has put a spring in the step of many property professionals, because it indicates that the economy is beginning to turn in the right direction and that a real estate upswing could be on the way too.
The past few days have brought further encouragement, in the form of an announcement by rating agency Moody's that its outlook on SA remains stable, which means that we will probably avoid a sovereign debt "junk" rating and the loss of billions of rands worth of foreign investment, at least this year.
However, while the current increase in business and consumer confidence is very welcome, it will not be sustainable unless we start to see whatever growth there is translate into a decrease in unemployment and thus a tangible improvement in the personal circumstances of many South Africans. Consequently, I think the next set of StatsSA employment figures is going to be the real indicator of whether we have reason to celebrate.
My concern is that the second-quarter turnaround in GDP was largely driven by a timeous increase in global metal prices, when what we actually need is a significant increase in actual mining as well as other economic activities that are major job creators, including manufacturing, building, tourism, agricultural production, and exports.
For that to occur, we, of course, need a business environment that encourages investment, expansion and above-all, the establishment of new small businesses. This is why the financial plan recently released by Finance Minister Tito Mboweni is so important, and why its focus on small business creation is so welcome.
But the biggest stimulus for job creation remains a solid increase in demand for goods and services (as well as homes), and for that to happen, we urgently need the Reserve Bank to announce at least one more rate cut before the end of the year to free up some disposable income. I really hope the Governor and the Monetary Policy Committee are listening...
Author: RealNet
