Trade growth satisfactory, says Mboweni

Anna Cox There is some reason for optimism about the prospects of economic growth in South Africa, said Tito Mboweni, Governor of the South African Reserve Bank. Speaking at the annual general meeting of the SA Israel Chamber of Commerce, Mboweni addressed guests on 'Observations on recent economic developments'. He was speaking, he said, at a rather uncertain global economic time when forecasts of slowing growth abound. The IMF noted in its World Economic Outlook published in April this year that prospects for global growth had weakened significantly since 2000. However, there was some comfort in that the IMF expects the slowdown to be short-lived, he said. The second half of the year should see a pick-up in US economic activity, growth in Europe was expected to remain "reasonably robust", and recovery in Japan was forecast to resume next year, he said. Japan, however, faced the challenge of addressing structural weaknesses, especially in its financial and corporate sectors. Regarding foreign trade and payments, South Africa's trade performance had been nothing short of stellar, said Mboweni. The surplus on the trade account increased slightly in the first quarter from R37 billion in the fourth quarter of 2000. "This goes some way to fulfilling our hopes of an export-led recovery for the South African economy. However, weaker global demand has caused the physical quantity of exported goods to decline by about 0,5 percent in the first quarter. But export prices in rand terms increased by 3,4 percent over those two quarters," he said. The country's gold and foreign exchange reserves were on an upward trend, having risen from R69,1 billion at the end of December 1999 to R87,8 billion at the end of the first quarter this year. This was equal to 16 weeks' worth of imports. The Reserve Bank's nett open forward position in foreign currency had been declining.