It would appear that with revenue collection exceeding budget this fiscal year, additional tax relief may be forthcoming when Finance Minister Trevor Manuel unveils the national Budget for 20062007 on 15th February. Welfare and dependency grants, personal income tax relief, and cuts in those costs which would make housing more affordable for middle and low income earners are likely to buoy consumption expenditure, and manufacturing.
More Quotes from Colen Garrow:
The monetary policy committee cautioned last month that it may not allow growth in credit to go unchecked, inferring that it may be concerned that consumption expenditure could introduce an element of inflation sufficient to attract a monetary tightening response.Colen Garrow
Despite the odd shortcoming, this Budget is on balance good. It entrenches South Africa's good fiscal record.
Colen Garrow
Another issue likely to resurface is the matter of 'a more competitive exchange rate', deciphered as code for the rand to weaken. Moral suasion such as this may be good for export-biased manufacturers, but will hardly be considered good for observers of inflation, or long-term interest rate markets.
Colen Garrow
Manufacturing will be under pressure because of currency strength, it will hold the sector back and put the handbrake on keeping growth from reaching its potential level.
Colen Garrow
It's a modest number but it could be better were it not for the rand. The sector is growing on strength of local demand and it does look as though global manufacturing is pulling itself out of a slump - but we are not out of the doldrums yet.
Colen Garrow
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