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UNCLAS SECTION 01 OF 02 PRETORIA 004252 
 
SIPDIS 
 
DEPT FOR AF/S/RMARBURG; AF/EPS; EB/IFD/OMA 
USDOC FOR 4510/ITA/MAC/AME/OA/DIEMOND 
TREASURY FOR OAISA/RALYEA/CUSHMAN 
USTR FOR COLEMAN 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD EMIN EPET ENRG BEXP KTDB SENV
PGOV, SF 
SUBJECT: SOUTH AFRICA ECONOMIC NEWS WEEKLY NEWSLETTER DECEMBER 28, 
2007 ISSUE 
 
¶1. (U) Summary.  This is Volume 7, issue 52 of U.S. Embassy 
Pretoria's South Africa Economic News weekly newsletter. 
 
Topics of this week's newsletter are: 
- Zuma to Review Inflation Targeting 
- JSE Rocky for New Mine Listings 
- PPI Slows to 9.1 Percent 
- Trade Deficit Surprise Fall 
 
End Summary. 
 
---------------------------------- 
Zuma to Review Inflation Targeting 
---------------------------------- 
 
¶2.  (U) Jacob Zuma, the newly elected President of the African 
National Congress (ANC), said that he would look into inflation 
targeting, the current monetary policy used by the South African 
Reserve Bank to control inflation.  "Clearly, our main method of 
inflation targeting, which is hiking the interest rate, has resulted 
in complaints from both the top end of the financial spectrum as 
well as the bottom end," Zuma reportedly said.  "So it stands to 
reason that there's some kind of problem there.  And though I am not 
going to pretend that I have delved into the issue properly, it is 
something that I am going to get to," he said.  The Reserve Bank has 
raised interest rates eight times since June 2006.  In his first 
speech following his election, Zuma moved to calm fears that there 
would be a shift in economic policies.  (Mail and Guardian, December 
24, 2007) 
 
---=--------------------------- 
JSE Rocky for New Mine Listings 
------------------------------- 
 
¶3. (U) New mining listings had a rocky ride on the Johannesburg 
Stock Exchange in 2007, with most of the newcomers trading in 
mid-December below both debut prices and mid-year peaks.  Seven 
resources companies joined the JSE this year, according to JSE 
business development manager Lauren Czepek, with another two or 
three in the pipeline for 2008.  The JSE is also seeing a lot of 
interest from foreign-listed mining companies seeking dual listings 
because they had South African assets and resources, or else needed 
to raise capital in South Africa or enter black empowerment 
transactions, Czepek said.  (Business Day, December 27, 2007) 
 
------------------------ 
PPI Slows to 9.1 Percent 
------------------------ 
 
¶4. (U) South Africa's producer price inflation (PPI) slowed to 9.1% 
year-on-year in November.  This fell below forecasts, and was lower 
than the 9.5% rise in October.  On a monthly basis, PPI rose by .3% 
after a 1.1% jump in October.  RMB economist Kay Muller said the 
figure was good news as "it shows that inflationary pressures are 
showing signs of easing, and endorses our view that interest rates 
will be left on hold in January."  However, Investec Group economist 
Annabel Bishop said that, while the figure was lower than expected, 
there is a "growing risk" of further interest rate hikes as CPIX 
inflation is likely to peak at close to 9% early next year. 
(Business Day, December 20, 2007) 
 
--------------------------- 
Trade Deficit Surprise Fall 
--------------------------- 
 
¶5. (U) The trade balance narrowed significantly in November to R608 
million ($87 million), the smallest gap since December 2006, 
compared with October's record R14.73 billion ($2.1 billion) 
shortfall.  Contributing to the deficit was a month-on-month 
decrease in imports of mineral products, machinery and original 
equipment components, and a month-on-month increase in exports of 
Qequipment components, and a month-on-month increase in exports of 
precious stones and metals and mineral products.  The cumulative 
trade deficit for the first 11 months of 2007 was R71.3 billion 
($10.2 billion), in comparison to R67.5 billion ($9.6 billion) for 
the same period last year.  This narrower-than-expected deficit will 
take some pressure off the rand and interest rates, with decreasing 
concern about the current account deficit for the fourth quarter. 
However, the current account deficit remains large, and will be 
around 6.5% of GDP in 2007.  (Business Day, December 28, 2007) 
 
 
PRETORIA 00004252  002 OF 002 
 
 
 
BOST