Johannesburg, 19 September 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the South African Reserve Bank’s (SARB’s) decision to keep the repo- and prime rate unchanged at 6.50 percent and 10.00 percent, respectively.
Speaking after this afternoon’s SARB announcement, SEIFSA Economist Marique Kruger said the decision bodes well for struggling businesses in the Metals and Engineering (M&E) sector and provides certainty in making key decisions affecting individual cost curves.
“The Bank’s decision was expected, especially given the current state of the domestic economy, which is in dire need of any kind of boost to ignite business activity. Despite an uptick in Quarter 2 Gross Domestic Product (GDP) growth, businesses in the M&E cluster of industries, including those of the broader manufacturing sector, still continue to face difficulties comprising of a volatile exchange rate, increasing intermediate input costs, operational costs and high fuel and energy costs,” Ms Kruger said. Moreover, given that micro, small-and medium enterprises in the M&E sector are generally sensitive to interest rate changes, the Reserve Bank’s decision to leave interest rates unchanged augurs well. She said companies will be better able to plan future production processes with a fair degree of certainty in the interim, without worrying too much about the cost of borrowing.
“Stability in the interest rates are, therefore, imperative towards reducing the cost of doing business by stakeholders in the M&E cluster and the broader manufacturing sector,” said Ms Kruger.
The cost saving benefits from low interest rates would also invariably transcend the M&E industry to include other important industrial sectors, such as the mining and construction sectors, which are important to its growth and sustainability.
Ends
Issued by:
Ollie Madlala
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za