Economist warns consumers

South African consumers will face some "head winds" over the next 12 to 18 months, Etienne le Roux, chief economist at Rand Merchant Bank says.

Speaking at a Finlay Events function on Monday to discuss South African's economic outlook, Le Roux said rising inflation would be the "big deal" for consumers in the coming months as this would squeeze their income gains.

Consumers also faced the possibility that interest rates would soon start to rise.

South African's current economic recovery and growth was consumer led, Le Roux said. He noted however that it was "critical" for the private sector to invest in order for the economic recovery to be sustained.

Manufacturing was one of the sectors that were still struggling with recovery, according to David Shapiro, investment expert with Sasfin.

Manufacturers were still under "immense" pressure. Proof of this, he added, was evident in recently released local company results.

"It's going to be a tough year ahead," Shapiro said.

Azar Jammine, chief economist with Econometrix, said that while a strong rand had its benefits for the local economy, it "does make life for manufacturers much more difficult".

"The rand is too strong and overvalued," said Le Roux.

Source: http://business.iafrica.com

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