S. Africa sees lower growth, wider budget gap
S. Africa sees lower growth, wider budget gap
In his three-year budget tabled to parliament yesterday, Finance Minister Pravin Gordhan said the budget gap for the financial year beginning in April would widen slightly to 4.6 percent of GDP from the 4.5 percent forecast in October last year.
However, the deficit is slightly narrower than the 4.7 percent predicted by economists polled by Reuters earlier this week, and the 5.2 percent gap projected for 2012/13.
The shortfall was partly to due reduced revenue from the mining sector, hit by strikes last year that left more than 50 people dead and shaved 15 billion rand ($ 1.7 billion) of output in Africa's biggest economy.
Tax revenue for the current year ending in March would likely be 16.3 billion rand ($ 1.84 billion) below projections. In 2013/14 and 2014/15 it is expected to underperform by 13.2 billion rand and 27.8 billion rand respectively.
Gordhan cut the growth forecast for this year to 2.7 percent from the 3.0 percent earlier seen, partly due to subdued demand from South Africa's key markets in Europe.
Growth expectations for the next two years have also been cut, with 3.5 percent seen for 2014 and 3.8 percent expected in 2015, far below the 7 percent growth the government says is needed to create a significant number of jobs.
"Weak external demand among South Africa's traditional trading partners has affected exports, particularly for manufactured goods," the Treasury said.
Domestic consumer demand, which accounts for about 60 percent of GDP, would remain modest as households struggle to find jobs while existing debt levels remain high.
Growth is also likely lag that of South Africa's peers in the BRICS group of leading emerging market economies, with China expecting to expand by 8.2 percent in 2013, while GDP in India is seen rising 5.9 percent and Brazil by 3.5 percent.
Gordhan said the government, still smarting from credit downgrades from Moody's, Standard & Poor's and Fitch, would keep a tight grip on its purse strings, with plans to reduce spending by 10.4 billion rand.
"The deficit is there because of the revenue loss that we have experienced, not because of expenditure," the finance minister stressed at a news conference before his speech to parliament.
But President Jacob Zuma's government, which has faced a series of protests against poor basic services in impoverished townships, would continue pouring money into infrastructure, education and health services, he added.
"This government will not get to the point where we impose austerity on our people," Gordhan said, alluding to fiscal tightening measures that have triggered violent protests in countries such as Greece.
The current account would remain under pressure, averaging a 6.2 percent deficit over the next three years and putting pressure on the rand exchange rate.
The rand weakened to 8.88 against the dollar from 8.835 before Gordhan began his address to parliament and was still around that level at 1336 GMT.
Government bonds weakened, with the yield on the benchmark 2026 paper jumping to 7.31 percent from 7.235 percent beforehand.
World Cup football fakes keep Dubai’s ‘Dolce & Karama’ traders busy
- Dubai's “Dolce and Karama” is the emirate's copycat capital
- Neymar Jr shirts are proving especially popular with local shoppers
DUBAI: Tucked away in an old residential district and far from Dubai’s glitzy air-conditioned malls, the Karama area of the city is doing a roaring trade in selling World Cup football shirts.
But if you’re looking for the genuine article, you may have come to the wrong place.
Karama is Dubai's copycat capital where the knockoff imitations of the world's most famous fashion brands are sold for a fraction of the genuine price.
Known to some locals jokingly by the epithet “Dolce and Karama,” a play on the Dolce & Gabbana Italian fashion house, this is a place where if you have to ask the price, you probably can afford it.
With three weeks to go until football’s new world champions are crowned, the world’s biggest sporting tournament is keeping the tills chiming on the street that has become notorious for selling everything from fake Luis Vuitton bags to knockoff Ray-Ban sunglasses.
However since the tournament kicked off just over a week ago, it’s been football not fashion, that has put a smile on the face of traders.
Retailing for a fraction of their high-street cost, the copycat shirts — especially those bearing the name of Brazilian superstar Neymar — are flying off the stalls less than week into the tournament, as UAE-based fans who want to don the colors of their favorite team or player, look for bargains.
Mohammad Ashraf has been trading in Dubai’s Karama Shopping Complex for 15 years.
At his store, Mina Fashion, Ashraf said the World Cup has brought a booming trade.
When asked how many shirts he would sell prior to the Fifa World Cup, he shrugged.
“Maybe one, two — maximum five a day,” he said.
But the Indian trader has quadrupled his business since last week’s kick-off.
“Now, we have been very busy,” he said. “We sell at least 20 pieces a day — maybe more,” he said.
His football shirts are a fraction of the cost of the genuine article on sale in Dubai malls where retailers are feeling the pressure from the growth of online rivals, the introduction of VAT and the strong dollar to which the UAE dirham is pegged — that is hitting tourist spending hard.
Karama football shirts sell for about 65 dirhams ($18) in adult size and 55 dirhams for children. But the real deal costs three or four times as much a few miles down the road in the Dubai Mall, the city’s biggest tourist draw.
In Karama, the football shirts of the Brazil, Argentina and Germany teams have been among the biggest sellers.
And the most popular player?
Ashraf said shirts bearing the name of Brazilian footballer Neymar da Sila Santos Junior have been flying off the shelves.
Abdulla Javid, runs Nujoom Al Maleb in the Karama shopping district — a shop selling a variety of knock-off sportswear — including World Cup shirts for men, youths and children.
“They are not real, not branded — branded ones are very expensive,” he said.
“We have shirts for Germany, for Argentina, for Portugal, for Sweden, for Brazil and for Belgium,” he said, pointing to racks of multi-colored football shirts.
Mens shirts retail for about 45 dirhams for adult sizes in his shop and 40 dirhams for youths. For young children, he sells shirts and shorts for a combined price of 30 dirhams.
The World Cup has also been a welcome boom for business.
“Before we sell maybe between five to 10 (shirts) a day,” he said. “Now, at least 20 to 30 pieces a day. It has been very busy. This time is a good time for us.”
Also at Karama Shopping Complex is Zico Sports.
Ahmed Jaber, a 53-year-old trader, said there are good deals to be found in at the shop he has worked in since the 1980s.
He sells football shirts that are both “branded” and “non-branded” — in other words the genuine article and cheaper knock-offs.
He said customers have been happy to shell out for the genuine football shirts for the adult sizes — which he sells for 379 dirhams, but for children, shoppers prefer to buy the fake football shirts, which he sells for about 30 dirhams.
The most popular shirts since the start of World Cup have been for Brazil, Argentina and France, he said, but his shops have an abundance of kit for all competing countries.
When he asked how the 2018 World Cup had been for business, he laughed.
“Not bad at all!,” he said.