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South Africa still not a bad place to be
Even if China slows down.
Geoff Candy
South Africa is at the beginning of a hard time scenario but, 2010 could
provide some welcome reprieve to the downturn.
This is according to Clem Sunter, scenario planner and Chairman of the
Anglo American Chairman's Fund.
"Despite the fact that our trade deficit looks incredibly sick. I
still feel that 2010 is a very good gap for the next year, even though
probably fewer people will come here. We've got to pray that Germany and
England get to the semi-finals.
"I think that the possible opening up of the Zimbabwean economy if
the government of national unity ever get their act together - I think
those are two hugely positive things for the South African economy,"
He told SAFM Market Update with Moneyweb.
But, he adds, "you can't get away from the fact that vehicle production
has fallen off the cliff, and it would appear that our exports have also
done so."
Part of this decline in exports can be explained by the decline in Chinese
growth, which is one of the main purchasers of raw materials.
This decline in Chinese growth, is of import for South Africa because
of our status as an export-driven economy that predominantly sells raw
commodities.
Markets went up for much of last week on rumours that the Chinese government
was planning to increase the size of its economic stimulus package, which
would be good news for exporters of commodities.
But, the Chinese government announced on last week that the Chinese central
planning organisation said they are seeing signs that the economy is stabilising
and would wait before adding to the stimulus package.
Chinese President Wen Jaibao, added that the current stimulus package
should increase growth in the superpower to 8%.
But, according to Sunter, who is one of only three Westerners to be invited
to address the National Communist party, that might be a little overstated.
"When I was in Beijing in April 2006, I did certain scenario discussions
with some of the leading officials in the Chinese Communist Party, they
said the thing they feared most was American recession, and that that
would halve China's economic growth rate from 10% to 5%. And the last
figure that I got was 6.8%, so I would say 8% is a hugely optimistic.
"My view is that all commodity markets at the moment are going to
remain negative, because the world hasn't decided whether we are in a
V, where there will be some kind of a recovery next year, and possibly
back into a new game the following year, or whether we are actually in
a U, which is going to be a five- to ten-year scenario."
Moneyweb.co.za,
09 March 2009
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