| Summary:
Expectations about the future course of inflation affected spending and imports
significantly in the 4th qtr of last year and is likely to boost the real growth in
domestic spending, as well as the current account deficit. A reveral is expected for the
1st qtr. Retailers report that sales growth in December was good and in some cases
exceptionally good. It appears as if many consumers did go and buy imported durables to
beat price increases that will result from the rand's fall. This was also the case with
car sales - the demand was quite strong in the 4th qtr.
It is also likely that fixed and inventory investment spiked to a greater or lesser
degree in the 4th qtr. This would certaintly be consistent with the experience of the
rand's fall in 1996 and 1998. Domestic spending and imports surged, but then fell back
quite significantly. |
