South Africa economy

The “fragile five” – Brazil, India, Indonesia, Turkey and South Africa – have had a torrid time since Morgan Stanley identified them last year as countries particularly vulnerable to the “tapering” of US monetary stimulus because of their large and rising current account deficits.

But, over the last two months, the investor storm that drove currencies, bond prices and equities lower in these five countries has abated. The pariahs of only several weeks ago have become investor darlings.

The questions now are: how sustainable is this rally and to what extent does this investor rehabilitation result from the five countries’ hard work to repair economic frailties? As a guide, we present our own ranking – the beyondbrics “fragile five work/reward quotient” (see below). Continue reading »

At first glance, it looks as if South Africa’s latest announcements on trade and manufacturing data suggest two different narratives – one of recovery and one of continued slowdown. In fact, however, a common thread between them points toward an overall slowing growth trend.

A surprise trade surplus of R1.7bn in February represented a swing from January’s deficit of R16.9bn, pushing the rand higher as investors grew more confident over South Africa’s export performance. However, the manufacturing Purchasing Managers Index, announced on Tuesday, slipped to 50.3 in February from 51.7 in January, suggesting a slowdown in manufacturing growth. Continue reading »

South Africa kept interest rates unchanged on Thursday as Africa’s largest economy continues to grapple with the policy challenge of subdued growth set against inflationary pressures.

The decision by the central bank’s monetary policy committee to keep its repo rate at 5.5 per cent was expected as the volatile rand has recovered slightly from a disastrous beginning to the year when it tumbled to five year lows against the US dollar. Still, the MPC’s decision was a tight one, with a four-to-three split on the committee. Continue reading »

South Africa’s current account deficit narrowed in the fourth quarter of last year to 5.1 per cent of GDP from 6.4 per cent in the third quarter. But the good news was tempered by the fact that the improvement came primarily from a slump in imports rather than an export recovery.

The current account deficit – along with the country’s budget deficit – is seen as a key forward indicator of South Africa’s vulnerability to further weakness in its currency, the rand, which has depreciated by around 19 per cent to R10.88 against the US dollar over the last year (see chart). Continue reading »

In a world of shrinking liquidity, sub-Sahara African governments are finding little room to manoeuvre in stimulating their cooling economies as investors and ratings agencies take a much harder line on state excesses.

With growth prospects improving in developed markets and questions being raised about the fate of emerging markets – especially with growing evidence of a bigger than expected Chinese slowdown – investors have started to write off large swathes of the developing world. Continue reading »

South Africa’s hike in its policy rate on Wednesday failed to impress traders who sold off the rand within 15 minutes of the hike announcement, driving it down by more than 3 per cent to 11.33 to the US dollar.

Speaking after the hike was announced, Ishitaa Sharma, a FX and rates strategist at Citibank said: “The markets are telling central banks they have to be a lot more consistent in their hawkishness.”

In advance of the South African rate hike, the rand had already weakened to 11.17 to the US dollar, a slide of 1.8 per cent. After the announcement, though, the rand fell further. Continue reading »

To hike or not to hike.

That will be the conundrum facing South Africa’s monetary policy committee as it began its first meeting of 2014 on Monday against a backdrop of emerging market turmoil and a tumbling currencyContinue reading »

With elections just months away, President Jacob Zuma and his ruling African National Congress party would have been wishing for some positive economic news as campaigning intensifies against a backdrop of stubbornly high unemployment and lacklustre growth.

But after a turbulent 12 months during which the pace of growth in Africa’s largest economy dipped to its slowest level since a 2009 recession, the first weeks of this year have offered little respite. Rather, more challenges lie ahead as domestic and external factors look set to combine to heap pressure on the country’s economic performance. Continue reading »

Last year, South Africans had to get used to the rand at 10 to the dollar – in 2012, 8-9 was the norm.

Now, it looks like 11 to the dollar may become the new normal. The rand on Thursday hit a 5-year low to the dollar of over 10.8, having depreciated from around 10.5 at the end of December. Continue reading »

What’s in store for South Africa in 2014? As far as economists and rating agencies are concerned, it’s a mixture of pressure on the current account deficit, sluggish growth and a constrained business environment.

There’s also the no-small matter of the upcoming national election which will have a big effect on labour relations that have so often blighted the economy and politics. Can a few domestic policy adjustments make the difference? Continue reading »

By Kevin Lings of Stanlib

Nelson Mandela has had an unprecedented calming and positive influence on South Africa’s political, economic and social environment for almost 25 years. His life-long quest for peace and reconciliation disarmed even the staunchest opponent, allowing diverse groups of people to work together in a way that seemed unimaginable prior to the ending of apartheid. It is time for the political, business and labour leadership of South Africa to honour his legacy and move this country forward to the benefit of all. Continue reading »

It’s clear that South African growth has stalled – Q3 figures out on Tuesday confirmed another quarter of sluggish growth of 0.7 per cent compared to the previous quarter, or 1.8 per cent year on year – below consensus estimates.

So what’s the problem – and what can policy makers do? Here is a selection of analyst comments. Continue reading »

By Annabel Bishop of Investec

South African growth has been getting steadily weaker; strikes and poor electricity supply have taken their toll; and the current account deficit is not improving. It wasn’t always like this. Continue reading »

South Africa has come a long way in 20 years, but last year’s violent mining strikes and sluggish growth has knocked confidence. Colin Coleman, managing director and partner at Goldman Sachs, discusses with William Wallis the country’s challenges.

Source: StatsSA

After the odd glimmer of hope (in macro data terms), South Africa is back on a downer. Retail sales for September came in on Wednesday well below analyst consensus, at a weak 0.2 per cent year on year, and a miserable contraction of 0.7 per cent month on month. The year on year figure hasn’t been this low since late 2009.

The consensus was for 2.5 per cent growth year on year. What went wrong? Continue reading »