South African Economy Expected To Feel Effects Of Global Economy Crisis

17 July 2012 18:00 - Lucy Williams

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South African Economy Expected To Feel Effects Of Global Economy Crisis

The South African economy is bound to begin feeling the pressure due to economic weakness around the world. Global economies are facing further setbacks as consumer and investor confidence worldwide declines. Major economies have also begun rapidly slowing; as a result the South African economy is expected to feel the effects.

According to economists at Old Mutual Investment Group South Africa (OMIGSA) the years ahead for the South African economy will be increasingly difficult as decline in growth, fewer job creations and flat interest rates are expected. It is clear that the economic problems faced by economies including the US, Europe and China have finally begun taking their toll on the South African economy.

Forecasts for the country’s economy have been downgraded with most figures falling. Johann Els of OMIGSA stated "consumer spending, which has underpinned our GDP growth for the past two years, is starting to flag, with household spending growth slowing to only 3.1% annualised growth in the first quarter of the year, compared to 5.0% in 2011."

It was reported that in the second quarter of 2012 global growth was at its slowest pace since the recession of 2008, a worrying statistic especially for the South African economy which remains vulnerable.

In terms of the South African rand the currency weakens, dropping a further 1.1 percent against the US dollar however on a positive note foreign appetite for South African bonds increases to a record high.


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