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Prospects for S. African Economy Improving
The clouds of gloom over South Africa's economic growth prospects are lifting, reviving hopes that a cut in interest rates may still be possible this year, the Citizen newspaper reported on Tuesday.
The rand is hanging on grimly about eight to the U.S. dollar while South African Revenue Services on Monday reported a surprisingly strong trade surplus of 3.78 billion rand (472 million U.S. dollars) in March against a 2.32-billion-rand (about 290-million-dollar) surplus in February. The boom in exports means more foreign currency flowing in, helping keep the rand steady and improving foreign perceptions.
Viewed with other strong fundamentals in the economy, the trade data will revive hopes for at least one interest rate cut his year. That will further boost confidence in South Africa and improve the prospects for job creation.
The cumulative trade surplus for the first three months of the year hit 9.89 billion rand (1.23 billion dollars), compared with 5. 01 billion rand (626.3 million dollars) in the same period a year ago, suggesting that while the weak rand may be bad news in some fields, it has been very good news for exporters.
The weak rand makes South African manufactured goods cheap on international markets when compared to other countries and that helps sell more goods.
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