Even the expected decline in interest rates
is unlikely to boost economic activity before
the latter part of 1999 - BIFSA
THE BUILDING industry slumped to an all time low during the third quarter of 1998 and technically, is in recession as investment levels showed a negative growth for the second consecutive quarter, said Building Industries Federation (BIFSA) executive director, Ian Robinson. South Africa's gross domestic fixed investment (GDFI) was currently 17% of gross domestic product (GDP), trailing substantially behind accepted international standards of 25% of GDP, he said.
The declining growth rate of real fixed capital stock poses a serious threat to the country. Unless the overall economic growth capacity improves, production capacity cannot hope to be realised, he said. The lag between interest rates and growth in private consumption expenditure was between six to twelve months.
Even the expected decline in interest rates is unlikely to boost economic activity before the latter part of 1999. Furthermore the lag between improved private consumption expenditure and building investment is a further six to nine months. Any signs of improvement are not expected before the second or third quarter of the year 2000, he said.
By Anna Cox
