Reserve Bank Governor, Tito Mboweni, has been reported as saying that he disagrees with Finance Minister Trevor Manuel and that he is of the opinion that the South African economy will take a longer time to recover from the current slowdown.
Trevor Manuel expects the economy to show some signs of improvement by the end of the year, while Mr Mboweni said on Tuesday that South Africa is likely to suffer under poor economic performance for a further three to five years. He did however also say that inflation was improving due to decreasing upward pressure on prices but that consumers should know that that did not mean there would be a rate cut every month.
Even the wealthy are starting to suffer in the current economic climate, many citizens are being forced to sell their luxury properties because they are now unable to pay their bond. Very wealthy areas were previously not afflicted with stress related selling but Rael Levitt, CEO of Auction Alliance, has reported that properties from areas such as Franschhoek, Clifton, Sandhurst and Umhlanga are now coming under the hammer and fetching only bargain basement prices.
The South African property market and other sectors will continue to suffer for a significant period of time and according to Mr Mboweni whichever party wins the upcoming elections the new government will have little room to manoeuvre and they would have to adhere to the decisions made at the G20 summit meeting last week.
Lets all hope Mr Mboweni is wrong and that we will in fact start to show some recovery before the end of the year.
