Economist expects 'reasonable' growth of 3%

'Not a bad picture given international backdrop' Anna Cox THE SOUTH African economy is still firm despite negative global factors. So said Dennis Dykes, chief economist of Nedcor, who addressed members of the SA Israel Chamber of Commerce recently on the topic of Economic Climate and Outlook. The GDP growth at 2% was not significant, but was building up quarter on quarter and was accelerating, he said. "The economy wants to move ahead. It is not a bad picture given what has happened internationally," he added. Exports and imports during the last quarter accelerated but remained pretty level, with exports benefiting from the rand's weakness. Cars have not been as strong as in 2000 and 2001. However, there was a rise at the end of 2001 with people buying to pre-empt rises. The good news, said Dykes, was that in 1996 South Africa was exporting only 1% of its vehicles production which has now risen to 30% and is expected to rise to 50% of total production, "which means our economy is globalising," he said. The bad news has been the inflation rate. Last year it reached 8% on the producer side and 3% to 6% on the consumer side. This year however, it has reached double digits because of negative trends including the rand. The 3% to 6% inflation target of 2002/03 was not met, with inflation sitting at around 9,7%, overshooting by some 3,5%. "This is not good news but we still could meet the 2003 targets although I believe it is unlikely until maybe in the third quarter of next year if oil and the rand stabilise," he said. Dykes said there was a real danger, a 50% chance, of another 1% rise in interest rates before the end of this year. On balance, a reasonable growth of 2,5% to 3% is expected. Provided the global situation comes together, there are signs of hope for the economy, he said.