Colen Garrow Quotations

Welfare and dependency grants, personal income tax relief, and cuts in those costs which would make housing more affordable for middle and low income earners are likely to buoy consumption expenditure, and manufacturing.

From this perspective, it is somewhat disappointing that corporate tax remains unchanged at 29% and that STC also remains unchanged at 12.5%.

Manufacturing will be under pressure because of currency strength. It will hold the sector back and (keep) growth from reaching its potential level.

Manufacturing is not the only supply sector battling a strong currency. Mining is being crippled by a similar problem.

While an environment in which the rand remains strong is always appropriate for something more creative, the National Treasury is unlikely to deviate from its consistent path of removing exchange controls gradually.

While it remains manageable, it can be argued that it is the rate at which debt levels are growing that may cause no further stimulus from the central bank.

What the bank is more likely to do (than cut rates) is intensify its moral suasion in support of a more competitive exchange rate.

Another issue likely to resurface is the matter of 'a more competitive exchange rate', deciphered as code for the rand to weaken. Moral suasion such as this may be good for export-biased manufacturers, but will hardly be considered good for observers of inflation, or long-term interest rate markets.

Fiscal relief may be the ammunition necessary to drive consumption expenditure but with it not being accompanied by aggressive monetary relief, growth in household consumption expenditure is showing signs of consolidation.

The SARB will probably do nothing with interest rates when it meets next week.

It would appear that with revenue collection exceeding budget this fiscal year, additional tax relief may be forthcoming when Finance Minister Trevor Manuel unveils the national Budget for 2006/2007 on 15th February. Welfare and dependency grants, personal income tax relief, and cuts in those costs which would make housing more affordable for middle and low income earners are likely to buoy consumption expenditure, and manufacturing.

The situation as it is, is thus inequitable and will have to be addressed by government at some stage.

The stance the committee has taken probably provides a useful reminder that the easier interest-rate cycle has bottomed.

Persistent currency strength has had a detrimental impact on export-based activities in the manufacturing sector, making similar imported goods more competitive.

The monetary policy committee cautioned last month that it may not allow growth in credit to go unchecked, inferring that it may be concerned that consumption expenditure could introduce an element of inflation sufficient to attract a monetary tightening response.

Despite the odd shortcoming, this Budget is on balance good. It entrenches South Africa's good fiscal record.

This is going to cement the case to hike interest rates. The numbers do nothing to alter the stance now developing in the market that the next move in interest rates will be up. The consumption side of the economy needs to be slowed.

The relative size of the mining sector is dwarfed by the contribution of the finance, real estate and business service sector's 19,5%.

It's likely to be a pro-growth budget in line with the government's target of reaching annual GDP growth of 6% by 2010.

It's a modest number but it could be better were it not for the rand. The sector is growing on strength of local demand and it does look as though global manufacturing is pulling itself out of a slump - but we are not out of the doldrums yet.

Apart from placing upward pressure on the yields in these markets, short-term rates may also respond, higher.

Interestingly, the forecast for December may be little changed from the previous month, around 3.7%, bringing the average for 2005 to less than 4.0%, a highly respectable figure.

In such instances, funds held offshore may potentially exceed the R750Ê000 ceiling, which limits the amount of funds which may be taken offshore via the vehicle of private foreign currency accounts. The situation as it is, is thus inequitable and will have to be addressed by government at some stage.

In such instances, funds held offshore may potentially exceed the R750 000 ceiling, which limits the amount of funds which may be taken offshore via the vehicle of private foreign currency accounts. The situation as it is, is thus inequitable and will have to be addressed by government at some stage.

In short, more South Africans employed suggests more disposable income and more money being spent on retail goods.

The manufacturing sector remains threatened by the persistent strength of the rand, although it should pick up from what looks to be a recovery in global manufacturing.

The irony is that it wasn't so long ago that South Africans were saying that the economy needs to grow at 3%. Now we're looking at 3,3% and saying it's dismal. It shows how the expectations have shifted.

This has, however, since been replaced by a cycle of higher trending growth, underpinned by record confidence; the lowest consumer interest rates since 1983; almost R89bn in personal income tax cuts since 1995; and generally sound macroeconomic, monetary and fiscal stability.

The current account deficit is above the 3% benchmark, a high-water mark generally considered to flag pending currency weakness to restore a balance between exports and imports.