Once again, while we all may wish that the economy recovers quickly from the current malaise, this is dependent on exigenous factors (external) becoming benign. This is too much to hope for. World economic growth is prjected to be a paltry 0.5% in 2009. That means little or no positive flows are likely to prop up either South Africa's economy or any other.
Another important factor to remember is current energy prices are an illusion. >$50 oil does not reflect true extraction costs, and this cannot continue for much longer. This is an artifical and temporary reprieve thanks to corrupt dealings in those markets. We are wrong to be grateful for these, because higher energy prices stimulated investment in alternatives, and also in further production capacity. Both of these are now no longer possible. The result? An energy supply crunch in 2009, possibly in mid-2009. As demand tries to turn, energy prices will spike, only worse than in 2008.
The result: unemployment and inflation - cycles of both. Very nasty.
CAPE TOWN — Treasury officials conceded yesterday that if the global economic downturn proved to be deeper and more prolonged than expected it would pose a significant risk to the economic growth forecast they used to underpin the 2009-10 budget announced by Finance Minister Trevor Manuel this week.
They believe the severe global recession will drag down domestic growth much further than the government expects.