As an indicator of the state of economic activity in December, one might interpret the decline in the growth for electricity consumption to its lowest level for any month in the past year, viz. 1.4%, as suggesting a marked slowdown in the pace of overall economic growth in the fourth quarter. Indeed, December's growth of 1.4% is well below the 2.9% growth in electricity consumption recorded for the whole of 2000 and below the 2.0% year-on-year growth recorded for the fourth quarter as a whole. It is also noticeable that even the 2.0% growth recorded for the fourth quarter was down on growth recorded earlier in the year. In other words December's low growth in electricity consumption was not isolated but followed on the trend of declining growth in the immediately preceding months.

Fortunately, it is possible to glean directly from the electricity figures that to draw an unduly negative conclusion from the electricity consumption figures specifically, is unjustified. This is because, unlike the electricity consumption figures, electricity production figures showed no signs of any marked slowdown in growth. The year-on-year growth in electricity production in December was 3.3%, not much different from either the fourth quarter quarter-on-quarter growth of 3.5% or the 3.8% growth recorded in electricity production of the whole of 2000. The difference between growth in consumption and production of electricity is to be found in the sharp increase in exports of electricity which took place in the fourth quarter. The year-on-year growth in electricity exported in the fourth quarter was no less than 40.1%. This represents a classic example of the manner in which solid growth in exports has been lifting the country's economic growth rate of late. In contrast with the fourth quarter however, growth in exports of electricity for the whole of 2000 was -6.1%, but this did not have an unduly negative impact on electricity production because the fall off in exports was more than counterbalanced by an even steeper 29.3% decline in imports of electricity over the course of the year.

FIGURES UNLIKELY TO IMPACT ON FINANCIAL MARKETS.

In conclusion, despite the slump in growth of electricity consumption in December, the ongoing moderate growth of electricity production suggests that the economy continued growing at a moderate pace in the fourth quarter of last year. Accordingly, one cannot draw any inference suggestive of either a speeding up or a delay in any likely monetary loosening. One does still not anticipate any monetary loosening before well into the second half of 2001. Even though the US Fed cut interest rates by 0.5% yesterday, this was expected and is likely to do no more than do away with the need for the Reserve Bank to tighten monetary policy in the wake of the Rand's steep decline of recent months. Should the Rand recover dramatically over the next few months, the probability of an interest rate cut sooner rather than later will obviously increase. However, much will depend on whether President Mbeki can restore confidence in his leadership. In the short-term nothing would help more than an opening of Parliament address tomorrow which restores a feeling of unity within the country.