The exceptional 11 points rise in the first quarter 2018 to 45 in the Rand Merchant Bank (RMB) / Bureau for Economic Research (BER) Business Confidence Index (BCI) should boost the South African economy, as improved business confidence results in a rise in inventories as well as an increase in non-residential building investment. Since 2008 the BCI has been above the neutral 50-point mark on only four occasions. RMB chief economist Ettienne le Roux said an increase of such magnitude was rare as since 1975 the BCI has only risen by 11 points or more on only 15 occasions or…
Author: Helmo Preuss
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The Eastern Cape (EC) returned to outperforming the national gross domestic product (GDP) growth rate in 2016 after its regional GDP under-performed in 2015. In 2016 the EC growth rate was 0.8% versus a revised 0.6% (0.3%) national GDP growth rate, while in 2015 the respective growth rates were 0.9% and 1.3%. The reason for this outperformance was that the primary sectors of agriculture and mining only have a 1.9% share of the regional economy at market prices. The secondary sector of manufacturing, construction and electricity, has a 17.3% share with manufacturing at 11.4%, while the tertiary or services sector…
Tough choices made in Budget put South Africa on a fiscally sustainable path “This is the challenge of our time, to build a South Africa in which all people have a decent standard of living, access to economic opportunities and opportunity to pursue their dreams.” Malusi Gigaba Budget Speech February 2018 In his briefing to journalists before his Budget Speech, Finance Minister Malusi Gigaba was at pains to point out that the media should look at the Budget holistically and not just focus on a few points such as raising taxes. “We have a positive narrative to tell and that…
South Africans are among the most optimistic people in the world according to a poll conducted by Ipsos MORI before the African National Congress (ANC) conference in December 2017. In all likelihood they would be the most optimistic in the world if a poll were to be conducted now, as the financial markets have embraced the change in the ANC’s top leadership, which has strengthened the rand and then resulted in a drop in fuel prices, which has boosted consumer spending. A feature of the poll was that the BRICS (Brazil, Russia, India, China and South Africa) countries occupied the…
Economic growth forecasts for 2018 have been ratcheted higher as data exceeds expectations with the South African Reserve Bank (SARB) the latest central bank to raise its 2018 GDP growth projection. The SARB raised its GDP growth forecast for 2017 to 0.9% from 0.7%, for 2018 to 1.4% from 1.2% and for 2019 to 1.6% from 1.5%. The news that China’s GDP growth in 2017 was 6.9% as opposed to the government target of 6.5% and the January 2017 international Monetary Fund (IMF) projection of 6.5% is merely the latest in a sequence of economic data releases that has seen…
By Helmo Preuss In another sign of the recovery in the South African economy, real retail sales soared by 8.2% year-on-year (y/y) in November after a revised 3.5% (3.2%) y/y gain in October according to Statistics South Africa (Stats SA). This was double the expected 4.1% y/y increase and the highest y/y increase since June 2012. It shows that the economy is doing far better than economists and ratings agencies expected, although anybody observing the frenzy at some of Grahamstown’s shops on Black Friday would not have been surprised by the blow-out increase. It seems as if almost every data…
South Africa should benefit from strong global manufacturing growth as it is a vital cog in the global logistics chain as it supplies raw materials such as coal and iron ore to global destinations, while at the same time it has also moved up the value chain and provides vehicles and pharmaceuticals to some one hundred countries around the world. The domestic logistics chain feeds into a global logistics chain, so events in the rest of the world have an impact on the South African logistics chain. The Baltic Dry Index (BDI), which measures the price of moving bulk raw…
The South African current account deficit on the balance of payments narrowed to 2.3% of gross domestic product (GDP) on a seasonally adjusted annualised basis in the third quarter 2017 from 2.4% in the second quarter 2017, the South African Reserve Bank (SARB) said in its latest Quarterly Bulletin. Economists were divided about whether there would be a narrowing or a widening second quarter due to the large foreign trade surplus, but the improvement in the trade surplus was outweighed by the widening in the services, income and current transfer deficits. The trade surplus improved to 1.5% of GDP in…
4.1% year on year jump in retail sales in Quarter 3 Consumers opened their purses in the third quarter with a 4.1% year-on-year (y/y) jump in retail sales after a 2.2% y/y gain in the second quarter and a 0.7% y/y drop in the first quarter following a 1.7% increase for the full year 2016 according to Statistics South Africa (Stats SA) data. This retail surge is confirmed by the strong growth in new vehicle sales, which have increased on a year ago basis for the past five months. Grocott’s Mail readers have become accustomed to receiving bad news about…
Mining and manufacturing production will boost third quarter gross domestic product (GDP) growth despite a monthly decline in September for both production series. The seasonally adjusted mining production increased by an annualised 8.3% in the third quarter compared with the second quarter, while manufacturing production rose by 4.1% on the same basis. There is no direct one to one correlation between production and value added, which is what is measured in GDP, but they normally tend to have similar growth rates. Economists tend to focus on the production data, while people with families to feed tend to follow the money.…