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Capacity utilisation to increase

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CAPACITY utilisation is expected to increase marginally to 38% in 2015, driven by maize, tobacco, horticulture and dairy which are expected to contribute much more significantly as compared to last year, according to the latest report by Econometer Global Capital 2015 economic outlook.

TARISAI MANDIZHA
BUSINESS REPORTER

The manufacturing sector capacity utilisation is currently at an average of 36,3% from 39,6 in 2013

Econometer Global Capital said industrial production continues slumping with the manufacturing indices pointing to a distressed economy, policy pronouncements remains lethargic whilst efforts for international reengagements appears promising but remote at this juncture.

According to the report, deflation is expected to dominate the year with an inflation rate to close the year at 0, 65%, Non-Performing Loans (NPL) ratio to end the year at 26% while aggregate banking deposits is expected to remain constant at $4,9 billion.

South African rand is expected to deteriorate by more than 10% to close the year at around +/- 1:13 and the real Gross Domestic Product (GDP) growth to average 1,2% for the fiscal year 2015.

“Annual inflation has been slowing down at a stagnant pace with Zimasset implementation yet to see the light of the day. The property market has been characterised by limited demand for CBD offices and suburban retail space with the informal sector dominating the majority economic activity within the country.

“We expect the South African rand to continue weakening for the better part of 2015 with political developments not exactly predictable,” reads the report.
Econometer Global Capital said the period under review saw a spike in the level of non-performing loans.

“Sorting out the NPL situation would improve the capacity of banks to ensure sustainable growth in private sector credit and help attain the envisaged GDP projections.

“We are way past the prudential regional benchmark of 5% for NPLs, in our view NPLs could rise further given the tight liquidity conditions and the huge possibility of a return to deflation for the better part of 2015,” reads the report.

According to the report revenue collections is expected to end the year at $3,75 billion with expenditures to breach the $4,1 budget size mark.

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