There was no surprise in Reserve Bank Governor Lesetja Kganyago’s announcement on 30 May, 2024, that the repo rate would stay at 8.25%, says High Street Auctions Director Greg Dart.
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“The Monetary Policy Committee (MPC) statement explaining the repo decision was spot-on describing the country’s economic start to 2024 as ‘uncertain’. Given that SA was heading for a general election, global markets were incredibly volatile and the geo-political landscape has been anything but stable, ‘uncertain’ is perhaps the understatement of the year.
“That said, despite consumer inflation being slightly higher than optimal, recent market developments have been positive – an example being the rand standing out as one of only five emerging market currencies to have strengthened this year.
“There is no doubt, however, that this week’s general election will have a massive impact on the country’s economic outlook, which Kganyago also referenced when he said: ‘Markets remain focused on the direction of domestic policy, a theme that has dominated many investor conversations over the past few months. Conditions remain uncertain, but we expect greater clarity in due course.’
Bad policy making
“The South African economy has unequivocally suffered in recent years, in large part due to bad policies, a lack of will to follow through, corruption and grid instability.
“The new leaders moving into government have an opportunity, now, to change this. Pro-market policies and strong economic reforms will revitalise global investor confidence in the country, and bring about faster economic recovery.”
Dart says that despite the unchanged prime lending rate, the property market is likely to benefit from increased investments in the second half of the year.
“Global trends consistently point to a stabilisation and recovery of the real estate sector after any election, and this one – however ground-breaking – should be no different.
He concludes that: “The market will show increased activity in the second half of this year, with that momentum properly taking off early next year when the interest rate is projected to improve.”
