We plug into the world economy in weird ways. Because of our banking
regulations we were largely immune to the credit crunch that hobbled the US.
But we all know it’ll hit SA in a big way eventually and the latest GDP figures, out yesterday, show the economy shrunk by 1,8% in the last quarter of last year, more than the consensus forecast of 1,5%. This is the first quarterly decline in a decade. If there’s another, we will be in technical recession. Sounds gloomy but here’s the weird shit: not all sectors are down. Moneyweb carried an interesting blog post by Barry Sergeant last week showing that retail was up . Check it out:
Earlier this week, Shoprite reported that for the six months to December 31 2008, group turnover grew by 27% to nearly R30bn; growth on a like-for-like basis was 22%. The South Africa supermarket numbers were 25% and 20%, and non-RSA businesses were 54% and 50%, respectively. The group’s furniture division’s sales grew by 13% for the six months and were “still affected by the higher interest rates as well as low inflation”….Domestic retail stocks, which are rapidly spreading operations across the continent, are basking in a remarkable niche of global stock markets.
So wtf is going on? Who are all those people buying furniture at Shoprite? Just one interest rate cut and everyone loses the plot. Barry, you need to tell us more, dude. In the meanwhile, here’s my everyone’s-an-economisit view based largely on my own spending patterns:
Monied South Africans have cut down on big-ticket items like cars, houses, sandstone tiles for their kitchens. Depressed with this deeply dull aversity to risk, they’re consoling themselves with pretty silicone kitchen accessories, clothes and wine (admittedly Tall Horse rather than Raka). Tito will probably drop the repo rate again soon so we’ll feel more relieved and ramp it up a bit more but it won’t make a damn bit of difference because global demand for South Africa’s commodities will continue to slow. But never mind, let’s open another bottle of vino. Now that’s what you call plonkonomics.
And here’s an insightful opinion piece in today’s Business Day saying that the GDP contraction was — after all — expected and the outlook may not be so gloomy — though it is unpredictable.
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