Johannesburg – 16 January 2020, The Steel and Engineering Industries Federation of
Southern Africa (SEIFSA) welcomes the South African Reserve Bank’s decision to
unanimously reduce the repo rate by 25 basis points, providing another boost to the
stagnant economy, the Federation’s Economist, Marique Kruger, said this afternoon.
Ms Kruger is of the view that the current socio-political and economic situation,
characterised by slow business activity and poor investor sentiments, led to the rand
depreciating for the better part of last year, also resulting in higher prices for imported
inputs. Moreover, low domestic demand in a contracting economy and declining industrial
production warrants the need for an expansionary monetary policy. She said the initiative
by the bank will help stimulate demand and reduce borrowing cost for small businesses.
She said given that the bleak state of the economy compounded by electricity supply
constraints had kept economic activity muted with extended negative ramifications on
business confidence, the Reserve Bank’s decision to ease monetary policy is
encouraging.
“The essence is to stimulate domestic demand in the short term and provide more impetus
to an ever-deteriorating domestic outlook. Although overdue, the decision also highlights
the need to use monetary policy sparingly as part of a stabilisation policy to stimulate
growth at the macro level,” Ms Kruger said.
Importantly, Ms Kruger said that the lowered interest rate will contribute towards reducing
borrowing costs in companies within the metals and engineering (M&E) sector and in
other interdependent industrial sectors, towards better production levels.
“This is imperative, given the significant contribution of these sectors to economic growth
and the enhanced level of existing inter-linkages,” she concluded.
Ends
Issued by:
Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za
SEIFSA is a National Federation representing 21 independent employer Associations in
the metals and engineering industries, with a combined membership of 1600 companies
employing around 200 000 employees. The Federation was formed in 1943 and its
member companies range from giant steel-making corporations to micro-enterprises
employing fewer than 50 people.