'SA has some shelter in crisis'

Johannesburg - It has become clearer that the recent "go-go years" have swiftly given way to a "go-very-slow period", running through at least 2010. This is cold solace, perhaps, but we will avoid a rerun of the 1930s, say Standard Bank's economists in a research note on Friday.

"The world will vigorously try to keep out of harm's way, and specifically a great recession. But, the odds are stacked in favour of this painful outcome. Public authorities in key industrial markets remain mired in stabilising their respective financial sectors, without which even considerable fiscal stimulus will prove impotent. Labour markets and national income will shrivel in most places, social cohesion will fray and, quite simply, life will be tough," they say.

Latin America, Asia and Africa have been generally unexposed to sub-prime lending and related investment markets. However, through general economic risk - essentially implying foreign trade and investment as well as local financial and asset market risks - these regions are set for a growth crunch.

"Africa, especially, will be struck hard because of the truly nascent nature of its autonomous, internal growth stimulus," they add.

The economists conclude by saying that South Africa is "somewhat shielded" by healthy public and corporate finances, but this will be of "slim offset" against an extraordinary exogenous shock and still fragile consumer fundamentals.

- I-Net Bridge