Weekend Argus (Saturday Edition)
Economists warn of mixed outlook for 2018
No light at end of tunnel about jobs
ECONOMISTS have painted a mixed financial picture of what lies ahead for South Africans in the new year. The best immediate news, however, is for motorists who can expect a double drop in the price of petrol next month and in February.
The Automobile Association (AA) said motorists could look forward to the price of petrol falling 35 cents per litre next month.
AA spokesperson Layton Beard said this was thanks to the rand’s strong run against the dollar this month.
Beard added the currency’s strength had been further bolstered by the ANC’s elective conference where the country’s deputy president, Cyril Ramaphosa, was elected the party’s new leader.
Farmers could also look forward to the possibility of diesel dropping 26c a litre, while illuminating paraffin is set to fall 28c a litre.
Economist Mike Schussler said there may be further good news in February when he expected the petrol price to drop 10c to 15c.
Schussler, however, cautioned that while he foresaw “slight growth” in the job market, it might not be as positive as many had hoped.
“We will grow jobs slightly but with about 600 000 adults entering the market every year we will not create the number of jobs we need. Some older adults will retire – about 150 000 to 200 000 – and another 100 000 new jobs will be created. The country will increase the number of unemployed in the broad sense by 300 000 to 350 000 in 2018.”
Schussler said salaries would rise about 1% above the inflation rate. “However, due to personal income tax brackets not shifting enough we will not see them increase as much after tax. Take-home pay will increase about 0.5%.”
He painted a particularly bleak picture for young people saying they would find it more difficult to get a job.
Schussler added that young people needed to offer “their services for free to get a foot in the door, say for a week or three in their holidays, so that they can get some experience which after a while may help them get a real job. Study is an option but today even adults with degrees find it harder to get employment”.
But there would be a damper in April when VAT kicks in on petrol and in September with a carbon tax of 13c a litre while electricity prices would go up 1 to 2c per kilowatt.
Schussler expected interest rates to fall 50 to 75 basis points by year-end. “Downgrades may play a role here and the SA Reserve Bank will have to be careful.”
While he anticipated an increase in food prices, he did not foresee it as big a problem as it would seem now.
Schussler said some rain in the Western Cape might help food prices average “low, single-digit increases”.
Schussler regarded 2018 as a transition year – on the way to the leadership change scheduled for South Africa in 2019.
“We may see more confidence but that will take a while to translate into higher house prices and a faster and bigger house market. I think by 2019 or at the latest 2020 the house market will look good.”