South Africa: Brics - for Better or Worse, SA Goes It Alone On Interest Rates

analysis

South Africa's peers in the BRICS group of economies have been cutting interest rates in 2019, in some cases aggressively, in a bid to spur economic growth. Should South Africa follow this route? The case is not open and shut, not least because of the sorry mess on the fiscal side of the economy.

Most of the economies in the BRICS group -- Brazil, Russia, India, China and South Africa -- are growing at paces that Pretoria can only dream about. In Q3, Brazil's growth limped along at 0.6% -- but at least it had growth during a period when SA's economy shrank 0.6%. Russia's economy got 1.7% bigger in that period, while Indian GDP growth has slowed -- to 4.5%. Chinese growth is at three-decade lows, but at 6% it remains a turbo-charged sports car roaring past the broken-down bakkie that is the South African economy.

And the response, at least on the monetary policy front, could hardly be starker. Brazil on Wednesday was poised to cut its benchmark Selic to a record low of 4.5%, which would be its fourth consecutive cut of 50 basis points (bp). In October, Russia's central bank made its biggest cut in two...

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