SA consumers get cash injection
Feb 08 2009 22:13
David van Rooyen
Johannesburg - SA consumers will have R65bn more in their pockets in 2009, which could help to prevent the economy from collapsing.
Lower fuel prices and interest rates as well as increased government grants to children and the elderly will give consumers more cash to spend.
The interest rate cuts of 150 basis points since Decembers have already delivered an estimated saving of R11bn in home loan payments.
Further cuts would save consumers more. Dr Cees Bruggemans, chief executive of First National Bank, expects another 100 basis point cut each in April and June, with more 50 basis point cuts later in the year.
The next cut could even come before April, with the Reserve Bank governor Tito Mboweni indicating on Friday that the planned monetary policy committee meeting could take place earlier.
If the oil price and rand maintain their current levels, the petrol price should be lowered again which will put an average of R3bn per month back in consumers' pockets.
It is also expected that Finance Minister Trevor Manuel will hike government grants in the budget on Wednesday.
Dawie Roodt, economist at the Efficient Group, reckons that grants could be increased by R8bn.
Experts agree that the economy will only really get going once banks start lending, which is still some way off given the current high consumer debt levels.
Nonetheless, the increase in consumer income should help some sectors, retailers in particular, in these difficult times.
Government invention, which President Kgalema Motlanthe promised in a speech during the opening of parliament on Friday, should also assist the economy.
The state is expected to maintain its spending on infrastructure, focusing on public works in particular. Welfare grants should be increased.
The budget, which will be announced on Wednesday, should provide more details about government's plans.
- Rapport
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