Johannesburg - The economic growth in the fourth quarter and this week's decision by the National Energy Regulator of South Africa (Nersa) on Eskom's tariff application could increase the slight chance of an interest-rate cut in March.
Following the economy's emergence from the recession with growth of 0.9% in the third quarter of 2009, economists expect growth of 2.5% to 3.2% for the fourth quarter.
The gross domestic product (GDP) is considered one of the key figures that could , say Standard Bank economists Danelee van Dyk and Shireen Darmalingham.
But GDP growth would have had to be under 0.4%.
That is unlikely, they believe, because demand-driven sectors - with further lows in the current cycle - would have had to fall to counteract the expected strength of the manufacturing, mining, electricity, construction and transport sectors.
Statistics South Africa (SSA) will publish the latest GDP figure on Monday.
Standard Bank expects the economy to have grown 3.2% in the fourth quarter, and last year's total decline to have been 1.8%. This estimate for the annual decline is the same as that of Treasury, which was announced in the budget review last week.
Rand Merchant Bank economist Carmen Nel expects the economy to have shrunk 1.7% in 2009.
She says that Nersa's tariff decision, due to be announced on Wednesday, could open the back door for another interest-rate cut - if it comes in below the Reserve Bank's expectation of a 25% hike.
If the decision is 35%, the Reserve Bank will have to increase its inflation forecast, which means there will be no lowering of rates, says Nel.
On Wednesday and Thursday SSA will also publish January's inflation figures along with consumer price index (CPI) and the producer price index (PPI).
N
el expects CPI inflation to remain unchanged at 6.3% year on year.
Standard Bank's economists expect CPI inflation to have risen slightly to 6.4%, and for it to add 0.5% month on month as January is generally associated with a lot of expenditure such as funeral costs and policies, gymnasium fees, lottery tickets, post-box rentals and insurance costs.
Money supply and credit extension figures for January, to be published by the Reserve Bank on Friday, are expected to show that consumers are still reluctant to incur debt.
Nel anticipates that credit extension to the private sector will decline 1.3% year on year compared with December's 0.76% fall, especially because credit extension to companies is still tight.
Van Dyk and Darmalingham, who look to a 0.6% decline, say credit extension to the private sector will improve only when consumers feel better about their indebtedness and can begin to take on fresh credit.
As far as companies are concerned, their credit appetite will probably take longer to recover than that of households, the analysts believe.
The January trade balance, which will be out on Friday, is expected to show a deficit, following December's surplus of R3.7bn. This is mainly owing to the seasonal recovery in imports.
- Sake24.com
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