In the news today: SARS admits slow growth

We have argued before that the domestic economy will underperform global peers in the first half of this year.  Here the SARS is admitting that this is indeed the case, as it is struggling with a R40 billion revenue shortfall.  This is a better gauge of the state of the real economy than GDP.  Note SARS revenues are down from R140 billion over the same period in 2008/09, R116 billion in 2009/10, to R112 billion this fiscal year.

Also note that the little bit of credit being created in this economy is being driven by low-income borrowers accessing credit from cash-flush lenders such as African Bank and Capitec.  This will ultimately set up our very own subprime market that will be exposed in the future, perhaps as far as 5-10 years out.  While the banking system looks extremely stable today, it won’t when the next credit cycle ends.  And then we’re headed to 0% interest rates also.