SA economy performing better

PRETORIA – South Africa’s economy is in the longest upswing in history, growing at an average annualised rate of 3,5 per cent during the past 23 quarters, the central bank said yesterday.

“We believe the economic recovery is continuing, domestic demand seems to be steaming ahead,” the South African Reserve Bank’s research head, Monde Mnyande, told reporters after the release of the bank’s annual report. Inflation was at historically low levels, domestic financial markets were flourishing and the only blemish was a “paucity of jobs in the formal sector,” he added.South Africa’s official unemployment rate stands at more than 26 per cent, and the government sees faster economic growth as key to creating jobs.Figures released on Tuesday showed that growth in South Africa’s gross domestic product quickened to 4,8 per cent in the second quarter of this year on a seasonally adjusted and annualised basis from 3,5 per cent in the first quarter.A recovery in manufacturing drove the acceleration, but domestic demand has been the main driver of the domestic economy over the past couple of years, ignited by interest rate cuts that have driven commercial lending rates to 24-year lows.In an annual address, central bank governor Tito Mboweni said strong growth in retail sales, credit extension, and the country’s swelling current account deficit were not fuelling price pressures.”Although these indicators were deteriorating, there was, on balance, little evidence that this was impacting negatively on inflation,” he said.Household debt rose to 61 per cent of annualised household disposable income by the middle of 2005 – its highest level in six years – but debt service costs remained relatively low compared to household income, which also climbed, the central bank said in its annual report.”It (household debt) is high but it’s not a disaster at all.”- Nampa-ReutersInflation was at historically low levels, domestic financial markets were flourishing and the only blemish was a “paucity of jobs in the formal sector,” he added.South Africa’s official unemployment rate stands at more than 26 per cent, and the government sees faster economic growth as key to creating jobs.Figures released on Tuesday showed that growth in South Africa’s gross domestic product quickened to 4,8 per cent in the second quarter of this year on a seasonally adjusted and annualised basis from 3,5 per cent in the first quarter.A recovery in manufacturing drove the acceleration, but domestic demand has been the main driver of the domestic economy over the past couple of years, ignited by interest rate cuts that have driven commercial lending rates to 24-year lows.In an annual address, central bank governor Tito Mboweni said strong growth in retail sales, credit extension, and the country’s swelling current account deficit were not fuelling price pressures.”Although these indicators were deteriorating, there was, on balance, little evidence that this was impacting negatively on inflation,” he said.Household debt rose to 61 per cent of annualised household disposable income by the middle of 2005 – its highest level in six years – but debt service costs remained relatively low compared to household income, which also climbed, the central bank said in its annual report.”It (household debt) is high but it’s not a disaster at all.”- Nampa-Reuters