Will weakening rand boost exports?

Economists discuss whether weakening rand will boost exports and if exports can boost the economy.

Economists discuss whether weakening rand will boost exports and if exports can boost the economy.

JOHANNESBURG - Following the weakening of the rand this week economists are now mulling over whether this will help the economy by boosting exports.

Speaking after a meeting the South African Reserve Bank's Monetary Police Committee Governor Gill Marcus said a weak rand would only help mines if miners and their unions didn't demand above-inflation increases.

She added that workers who strike for higher-than-inflation hikes could cost the country jobs.

"Excessively high settlements will come at the expense of retention of employees, employment creation and could result in higher inflation. The risk of a higher price spiral remains high."

Marcus, who announced the repo rate would remain unchanged at five percent, also said she was deeply worried about the state of the economy.

But Investec's chief economist Annabel Bishop said those who support a weak currency are wrong.

"Rand weakness is clearly driving up demands. Higher inflation is a constant consequence of currency weakness."

Meanwhile, several economists are disputing Marcus' gloomy outlook for the economy saying we can still expect economic growth.

Bishop said she is more optimistic than Marcus.

"I'm not as gloomy as Gill Marcus. I don't have the same weak growth forecast that she has for economic growth. Perhaps my growth forecast us too high but I'm looking at about three percent."