[ECONOMIC COMMENTARY BY LUKE DOIG, SENIOR ECONOMIST AT CREDIT GUARANTEE INSURANCE CORPORATION]
Talks of hiking interest rates at this stage are ludicrous. Indeed murmurings are that the inflation target band may well be widened somewhat to accommodate the debilitating electricity price increases. Inflation is likely to fall decisively within the target guidelines within the first quarter, even with a large Eskom hike.
The latest Reuters Econometer has consumer inflation below 6% for the next three years, albeit with outcomes very close to the upper band. Consumer and business confidence remains fragile and even any possible income tax hikes will only serve to dent this further. Australia escaped outright recession in the downturn and were the first major economy to hike rates after their initial softening stance; however they have recently put their tightening approach on hold. There is also no certainty that local job losses have been stemmed.
With hopes of a nascent recovery becoming more entrenched by mid-2010, everything possible should be done to support the local economy in the face of global concerns. At worst, interest rates should stay on hold.
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Credit Guarantee Insurance Corporation of Africa Limited
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About Credit Guarantee:
Credit Guarantee Insurance Corporation of Africa Limited, registered in 1956, is the largest (by premium income) and leading (80% market share) South African underwriting company operating in the field of debtors insurance. Credit Guarantee is a subsidiary of insurance giant, Mutual & Federal which owns 51% of the company, ultimately making it part of the Old Mutual Group.
Credit Guarantee's major business is the insurance of domestic (local) and export payment risks where its client companies sell to other companies on credit terms.
Credit Guarantee’s unique strength lies in its ability to secure a vast store of confidential information and market intelligence from a network of contacts and to interpret this data to support the business of its clients - in both local and international markets.
It is ISO 9001/2008 compliant across all aspects of its operations and sports an AA (double ‘A’) rating from Global Credit Ratings Company.
