{"id":208,"date":"2011-08-10T12:19:23","date_gmt":"2011-08-10T12:19:23","guid":{"rendered":"http:\/\/www.thebizsense.com\/za\/?p=208"},"modified":"2011-08-10T12:20:41","modified_gmt":"2011-08-10T12:20:41","slug":"forex-will-shield-sa","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/za\/news\/forex-will-shield-sa","title":{"rendered":"Forex will shield SA"},"content":{"rendered":"
\"Foreign<\/a>

Foreign Currency Reserves<\/p><\/div>\n

Cape Town \u2013 South Africa\u2019s low lending rate and the Reserve Bank\u2019s stockpiling of more than $50 billion in foreign currency would help shield the country from some of the turmoil experienced by global markets in recent days, Johan van den Heever, the Reserve Bank\u2019s deputy chief economist said today.<\/p>\n

Briefing the National Assembly\u2019s finance committee on the release of the Reserve Bank\u2019s 2011 Annual Economic Report \u2013 which highlighted South Africa\u2019s poor export performance and slow recovery of lending by banks \u2013 Van den Heever said the impact of this week\u2019s market turmoil would, however, impact \u201cfairly heavily\u201d on consumer and business confidence.<\/p>\n

\u201cIt is quite clear that people will under the circumstances be more reluctant to enter into bold ventures, big capital expenditure, really heavily-geared undertakings and so that it is not good news for short-term growth and longer-term investment,\u201d he said.<\/p>\n

But he believed that despite this, South Africa would continue to grow – on the back of a consumer spending upswing, combined with low interest rates, a strong financial system and relatively good fiscal conditions.<\/p>\n

He said one positive to come out of the market chaos was that the high level of unexpectancy had led to an increase in the gold price, which would benefit the economy.<\/p>\n

Turning to the bank\u2019s annual economic report, the Reserve Bank\u2019s head of financial analysis and public finance, Vukani Mamba, said even though the country\u2019s repo rate was at a low of 5.5% \u2013 the lowest in 30 years \u2013 lending by banks had not picked up substantially.<\/p>\n

He said the recovery of the credit advances had been slower than that following South Africa\u2019s previous recessions namely in 1974, 1982 and 1990.<\/p>\n

The report revealed that the advance of credit had in February this year increased by just 5% above the level it stood at in May 2009, just months before the economy began recovering in September 2009.<\/p>\n

Mamba attributed this to the poor recovery of the productive sectors, the high number of job losses (reducing the number of those who can qualify for credit) and the high levels of indebtedness of consumers.<\/p>\n

Banks had also incurred high impairment rates, which had seen them pulling back on lending.<\/p>\n

The report said the level of impaired advances, which grew to 6.1% in December 2009, had levelled off last year and stood at 5.8% in April this year.<\/p>\n

Despite this, South Africa\u2019s percentage of non-performing loans remained \u201crelatively high\u201d when compared with other emerging-market countries.<\/p>\n

At just under 6% in the fourth quarter of 2010, the level of non-performing loans was lower than Russia (at over 9%), but higher than Brazil and Chile (3%) and India (just below 3%).<\/p>\n

But Mamba believed the bank\u2019s prudence had been instrumental in protecting the economy, when considering that the global financial crisis was triggered by US banks lending to highly indebted individuals.<\/p>\n

Another concern highlighted by the report is South Africa\u2019s poor performance of exports.<\/p>\n

Van den Heever pointed out that the country\u2019s exports had not kept track with fellow BRICS countries and advanced economies, which had rebounded at a far faster rate following the end of the recession.<\/p>\n

He attributed the poor performance of exports to \u201cquite a long list\u201d of problems and not just to the strength of the rand.<\/p>\n

These included infrastructure bottlenecks, lack of electricity capacity and the falling quality of some of the country\u2019s minerals, including the grade of gold mined.<\/p>\n

South Africa\u2019s productivity was also a challenge, particularly when compared with a country like China, said Van den Heever.<\/p>\n

Added to this, many of South Africa\u2019s export destinations were in the developing world \u2013 Europe, Japan and the US \u2013 where the recession was the deepest.<\/p>\n

He said if South Africa\u2019s export performance continued its lack lustre performance, the fiscus would be reduced.<\/p>\n

However, he said South Africa had built up its foreign currency reserves from $8 billion in 2002 to about $50 billion \u2013 which would allow the country to pay for imports if exports continued to under perform. \u2013 BuaNews<\/p>\n","protected":false},"excerpt":{"rendered":"

Cape Town \u2013 South Africa\u2019s low lending rate and the Reserve Bank\u2019s stockpiling of more than $50 billion in foreign currency would help shield the country from some of the turmoil experienced by global markets in recent days, Johan van den Heever, the Reserve Bank\u2019s deputy chief economist said today.<\/p>\n","protected":false},"author":1,"featured_media":209,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[27,1],"tags":[149,148,31],"class_list":["post-208","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-news","tag-foreign-currency","tag-johan-van-den-heever","tag-reserve-bank"],"_links":{"self":[{"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/posts\/208","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/comments?post=208"}],"version-history":[{"count":4,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/posts\/208\/revisions"}],"predecessor-version":[{"id":214,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/posts\/208\/revisions\/214"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/media\/209"}],"wp:attachment":[{"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/media?parent=208"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/categories?post=208"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thebizsense.com\/za\/wp-json\/wp\/v2\/tags?post=208"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}