Not all bad news for 2009 and beyond - economist

As the developed world prepares itself for recessionary times and with global sentiment at its slowest levels in decades, the South African business community has tried to absorb and interpret the impact it will have on its bottom line. Will consumers dramatically reduce their buying, will the rand's depreciation continue, will inflation and interest rates drop and can we as businesses survive?

Absolutely, maintained Jammine.

Emerging markets

He stated that although SA faces a slowdown in GDP growth, it won't be heading into recessionary times similar to that of the global developed markets. Although the likes of China and India will be affected, their growth projections still remain positive, just like SA's economy and the emerging markets.

While SA cannot avoid job losses in the mining sector (as demand for commodity prices decreases) combined with very disappointing vehicle sales figures, other fundamentals look more favourable. Inflation and interest rates are set to decrease this year, real wage increases should land up being higher than inflation, and the preparation for the 2010 FIFA World Cup leaves the SA market in a unique and favourable position.

Jammine reiterated that in no way was SA heading into a retail boom, but we are certainly not going to mimic the atmosphere in New York or London. He said SA consumers are still highly indebted, and the proportion of their expenditure to service interest debt remains far too high. Our residential property growth continues to slow and in real terms is negative, and retail sales in the durable and semi durable categories will find trading difficult as consumers delay and substitute the 'nice to have' for the 'need to have' purchase.

Close to the end

He did feel that the impact of the National Credit Act (NCA) has now been absorbed and although retailers relying on credit purchases would still face challenging times, the bottom of the curve may be close to the end.

Wrapping up, Jammine reiterated that the ongoing interest in the African continent remains very optimistic, but on the down side, SA's largest challenge remains that of employment (of skilled labour) and the education of our children. With approximately 1.5% of university exemptions with maths leaving school from the pool that started 12 years ago, the skills shortage remains a concern and the gap between the rich and the poor will be maintained if not spread even further.

"NAB and CTP are proud to have been able to afford our clients the opportunity to hear from the experts like Dr Jammine on what is expected in 2009," remarks John Bowles, joint MD of NAB.

"It's just one of the ways we aim to add value this year and put into perspective for an interesting year ahead."