Tag Archives: South Africa

savings rates, growth, and struggling green shoots

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So in the US the high savings rate is hurting growth, and in South Africa the low savings rate is hurting growth.

Next thing they’ll be saying is economies should not have a savings rate in order to have optimal output and employment…

Did I say they don’t understand the monetary system???!!!

And one reason the green shoots may be dying is the relentless monetary tightening as lower rates for savers,

quantitative easing as Central Banks accumulate higher yielding securities in exchange for reserve balances,

and lower interest paid by governments on their securities due to the lower rates

all contribute to removing interest income from world consumers.

South Africa’s Low Savings Threaten Growth, Nene Says

by Nasreen Seria

July 6(Bloomberg) — South Africa’s low savings rate is
crimping the country’s rate of sustainable economic growth,
Deputy Finance Minister Nhlanhla Nene said.

The low rate is also inflating the current account deficit,
making South Africa more reliant on foreign capital inflows,
Nene said in a speech to the South African Savings Institute in
Johannesburg today.

The rate of growth in consumer savings has been declining
since the first three months of 2006 after the central bank cut
interest rates to a 24-year low in 2005, spurring spending.
South Africa’s total savings rate is 17 percent of gross
domestic product, according to the quarterly bulletin of the
South African Reserve Bank.

“Persistently high current account deficits can lead to
macroeconomic instability if foreign liabilities rise too much
and foreign capital inflows dry up,” Nene said. “By reducing a
country’s dependence on foreign capital inflows, higher domestic
saving therefore makes an economy less vulnerable to sudden
reversals in capital flows.”

The current account deficit, the broadest measure of trade
in goods and services, widened to 7 percent of GDP in the first
quarter as mining and manufacturing exports collapsed.

South Africa also needs to boost its savings in order to
lift the economic growth rate, Nene said. Africa’s biggest
economy is in its first recession in 17 years, and will probably
contract 1.5 percent in 2009, according to the World Bank.

“It is crucial to raise the level of our national saving
in support of both short-term economic stability and long-term
productivity growth and prosperity,” Nene said.


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South Africa’s Unemployment Rate Increases to 23.5%

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Good place for the federal government to fund minimum wage jobs for anyone willing and able to work and turn the nation into a model of prosperity overnight.

South Africa’s Unemployment Rate Increases to 23.5%

by Nasreen Seria and Mike Cohen

May 5 (Bloomberg) — South Africa’s unemployment rate, the highest of 62 countries tracked by Bloomberg, rose in the first quarter as the economy probably entered a recession for the first time in 17 years.

The jobless rate increased to 23.5 percent from 21.9 percent in the previous three months, Statistics South Africa said in a report released in Pretoria today. The number of people out of work rose to 4.18 million from 3.87 million.

“Manufacturing and mining are under strain, and we can expect these numbers to worsen,” said Fanie Joubert, an economist at Efficient Group in Pretoria. “We’re unlikely to see a recovery until the fourth quarter.”

The ruling African National Congress, which won a fourth consecutive five-year mandate in April 22 elections, has pledged to make “decent work opportunities” the focus of its economic policy. The government is aiming to cut the unemployment rate to 14 percent by 2014.


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