As the global economic crisis spreads around the world, South Africa is feeling the effects. The rand posted a third week of declines against the dollar closing at 1 ZAR = 0.098 USD (1 USD = 10.225 ZAR) Friday.
Ontop of financial pressures, South Africa struggles under political uncertainty with elections in April. A situation which is raising investor’s eyebrows and potentially keeping them away more and more.
According to Bloomberg:
“South Africa抯 rate of economic expansion will fall below 1 percent in 2009, prompting the South African Reserve Bank to cut its key interest rate 3.5 percentage points to 8 percent by year-end, Barclays Plc-owned Absa Group Ltd. said in a client note this week.”
From Barclays Capital on South Africa:
“South Africa’s retail sales fell 4.0% y/y in November, from a 2.3% decline in October. The October and November retail sales data, together with whole of Q4 data for vehicle sales, point to continued weakness in consumption activity in Q4 08. In Q3 2008, expenditure-side GDP data released by the SARB showed a 0.8% contraction in consumption expenditure, the first q/q contraction since Q4 98. Another development worth noting out of the release was that retail inflation, as implied by the deflator, fell further, printing 15.3% from 15.9% in October and a peak of 17.7% recorded in August 2008.”
Image by kyknoord爑nder Creative Commons.
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