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It is 'not easy to do business in Gauteng'

By unknown | Feb 01, 2007 | COMMENTS [ 0 ]

Staff Reporter

Staff Reporter

The Gauteng Business Barometer slipped by 6,2percent in December to 145 index points, as higher interest rates and inflation place increasing pressure on businesses, said economist Mike Schussler.

Schussler, who compiles the index with Standard Bank and the Gauteng Business newspaper, said the barometer for December clearly showed that it had become difficult to do business in the province. The economic stress index, a sub index of the barometer that measures negative economic factors, is at its highest level since 2003.

"It is driven up by higher inflation and interest rates, as well as an increase in civil debt judgments and a downswing in the creation of new jobs," said Schussler.

He said that though he expected more interest rate increases of between 25 and 50 basis points over the next few months, the negative affect on the economy might be at its peak.

Standard Bank chief economist Goolam Ballim said even though the barometer slipped in December, he expected continued economic growth this year for South Africa's economic hub.

"The effects of higher inflation and a slowdown in the growth of property values on consumer spending is becoming more evident. Investment in infrastructure and the weaker rand will benefit the supply side of the economy and the growth drivers of the economy will therefore shift from consumers to producers," he said.

Ballim said South African businesses would continue to cope with a volatile currency, which was at the mercy of domestic and international events.

He expected a stable year for interest rates, which might even start to decline at the end of the year. - With I-Net Bridge


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