Bleak first quarter likely to follow Cape's best ever December

Ray Smuts THE RAND'S capricious performance is unlikely to be a permanent aberration, but even so importers planning contracts for the year ahead should be forewarned that the currency is vulnerable and apt to fluctuate dramatically over a relatively short time frame. This is the word from Albert Schuitmaker, executive director of the Cape Chamber of Commerce and Industry, as Western Cape importers, exporters and local traders count their fortunes after one of the best December seasons yet. Retail sales were up by between 15% and 30%, hospitality industry turnover increased by 30% to 45% with consequent spin-offs for the entire economy - many beneficiaries of the tourism boom are not directly connected to the industry - and luxury properties were selling as if there would be no tomorrow. (A foreign client paid R11 million for a Clifton beachfront apartment that has yet to be built.) Good times are however inevitably followed by bad and the first quarter of the Cape new year is no exception, historically speaking, as Schuitmaker can testify after 17 years with the Chamber. "Last year was one of the worst in history and the next three months will also be very bad, one of the problems being that a lot of locally manufactured goods contain imported components, so importers should brace themselves for a tough time. "They obviously placed last year's orders early so did not take the blow of the rand coming down but we are concerned that with the rand as it is now we will see quite a dramatic reduction, perhaps as much as 20%, in imports. "If the rand stabilises - economists are talking of R10 or R11 to the dollar and R14 or R15 to the pound - then that bleak period for importers might only last for three rather than five or six months." For now, importers should proceed with utmost caution taking into account possible fluctuations by the currency for whatever reason - not necessarily emanating from within the country - and when planning contracts be careful to build in sufficient contingency so as not to get caught, cautions Schuitmaker.