Growth, inflation data give conflicting cues

Economic data are providing confusing signals to the Reserve Bank’s monetary policy committee (MPC), which starts its two-day meeting tomorrow. The bank has cut its repo rate by 3.5 percentage points since December, to 8.5 percent – after a hike of 5 percentage points between June 2006 and June 2008.

The argument for a further cut will be supported by data due today from Statistics SA, which will show gross domestic product (GDP) shrank in the first quarter, after contracting an annualised 1.8 percent in the previous quarter.

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Swine flu could hit global economy: IMF

Tokyo – The global spread of swine flu could have “notable effects” on the world economy, a senior IMF official said Monday, warning that the economic crisis was far from over.

John Lipsky, first deputy managing director of the International Monetary Fund, said the risks from the new type of flu “are hard to predict as it is unknown, as well as regarding its spread and its mortality.”

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Inflation target open to debate

South Africa was managing its debt to ensure it did not overborrow in its efforts to boost growth, new Finance Minister Pravin Gordhan said yesterday.

Gordhan, who was sworn in as finance minister on Monday, said in a series of radio and television interviews that the government would be discussing policy issues, including inflation targeting – one of the investor friendly policies that labour and the ANC’s communist allies wants to change.

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Mboweni looks east for growth

Continued growth in China and India will support the local economy while advanced economies contract by 3.8 percent this year, according to Reserve Bank governor Tito Mboweni.

Mboweni, who last week cut the repo rate by a further 1 percentage point to 8.5 percent, linked South Africa’s fortunes to those of the global economy, which was in a “severe synchronised downturn”.

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