So reckons Tony Clarke, MD of Rawson Properties, citing the floods which have hit agriculture in eight of South Africa’s nine provinces as the major culprit.Some 3% of South Africa’s gross domestic product is, said Clarke, generated by the agricultural, fishing and forestry sector and the country is a major producer of maize, soya beans, wheat, fruit and wine, all of which have at some point been affected by the floods.
“This means that by the middle of 2011 the country will be short of these products which, in turn, will lead to price rises and a general increase in inflation. Inevitably then the SA Reserve Bank will counter this by raising its rates.
“We will see at least a 50 to100 base points rise in the rate before year end 2011,” said Clarke.
Just as interest rates reached a 30-year low, we must prepare for a possible increase again by mid 2011. This may/may not be the case, but it is always better to be prepared.
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