JOHANNESBURG, Feb 26– The unexpected quickening of economic growth in South Africa is now expected to lead to at least two more interest rate hikes this year, an economist says.
According to figures released by Statistics South Africa (Stats SA) here Monday, the economy grew by 1.9 per cent for the whole of last year with the seasonally adjusted real gross domestic product (GDP) at market prices for the fourth quarter of 2013 expanding at an annualised rate of 3.8 per cent, above market expectations.
However, the unexpected quickening growth is now expected to lead to at least two more interest rate hikes.
and economists say the surprise economic growth justifies another increase as soon as next month.
“It’s a bit of a double-edge sword. On the one hand it’s good that our growth is starting to improve but the other side of the coin is that it opens the door for the (South African) Reserve Bank to continue hiking the interest rates,” says Barclays Africa Capital economist Michael Keenan.
“We had the first basis rate hiking in January and we think they will probably hike rates again in March and probably midway through the year as well. I think this data that we saw basically justifies or allows the Reserve Bank to high rates again.”