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BER Research Note: SA's post-crisis performance

According to new BER research, the SA economy could have been between 10% and 30% larger by 2017 under alternative post-crisis growth assumptions

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Update: FNB/BER CCI

The 2018Q3 FNB/BER Consumer Confidence Index release date is still to be confirmed.

Recent Releases

Domestic headlines last week were focused on the resignation of Nhlanhla Nene as finance minister and the appointment of former Reserve Bank governor Tito Mboweni as his replacement. Along with the gyrations of the US dollar, much of the local currency’s fluctuations were tied to these developments, especially with the Medium Term Budget Policy Statement (MTBPS) looming . Meanwhile, on the global data front, inflation pressure eased in the US in September. Both producer and consumer inflation recorded slower growth on an annual basis. ...Get it here

A short summary of the BER’s latest macroeconomic forecast. The domestic economy entered a technical recession in 2018Q2. The excitement that gripped the country in 2018Q1 is now firmly in the rear-view mirror. The short-run outlook for the domestic economy is clouded by low levels of private sector confidence, a subdued consumer demand environment, weak private sector fixed investment, and constrained fiscal and monetary policy. Add to that creeping concerns regarding global growth, and we are far less optimistic about the short-term outlook than in early-2018....Get it here

The domestic economy entered a technical recession in 2018Q2. The excitement that gripped the country in 2018Q1 is now firmly in the rear-view mirror. The short-run outlook for the domestic economy is clouded by low levels of private sector confidence, a subdued consumer demand environment, weak private sector fixed investment, and constrained fiscal and monetary policy. Add to that creeping concerns regarding global growth, and we are far less optimistic about the short-term outlook than in early-2018....Get it here

In marking the 10th anniversary of the largest financial crisis since the Great Depression, the latest BER Research Note looks back at the performance of the SA economy between 2010 and 2017. The relatively simple “back-of-the-envelope” calculations contained in the study provides some insight into the order of magnitude of the cost of the stagnation in the SA economy between 2010 and 2017....Get it here

In a quiet week on the domestic data front, local financial markets took direction from US dollar strength and higher US bond yields. In the domestic section, we unpack the latest vehicle sales data. We also discuss the BER’s revised forecast for real GDP growth for the period 2018 to 2020. The combination of weak GDP prints in 2018H1 and several other adverse developments have necessitated a significant downward revision to our outlook for 2018/19. In the international section we discuss the latest non-farm payroll report out of the US, which points to continued improvements in the labour market. We also look at the latest reading for the JP Morgan Global Manufacturing Purchasing Managers’ Index (PMI) for a clue regarding the stance of the global economy. ...Get it here

Monthly survey of leading South African economists who forecast key macroeconomic variables....Get it here

In marking the 10th anniversary of the largest financial crisis since the Great Depression, this short note (exclusive to BER Macro clients) looks back at the performance of the SA economy between 2010 and 2017. The underperformance of the SA economy in the post-crisis period was driven by a wide range of complex factors, both internal and external. However, we argue that the relatively simple “back-of-the-envelope” calculations contained in this note do provide some insight into the order of magnitude of the cost of the stagnation in the SA economy between 2010 and 2017....Get it here

Comprehensive economic statistics handbook. The latest South African and international economic data is presented in tables and graphs. Sectoral trends are also displayed....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

There was a raft of domestic data releases last week, including the Absa Purchasing Managers’ Index (PMI), and Producer Price Index (PPI) and employment data from Statistics South Africa (Stats SA). These data releases, among others, are unpacked in the domestic section. On the international front, we discuss the latest interest rate decision by the US Federal Reserve (Fed). The Fed hiked its main policy interest rate and the accompanying statement suggest that further gradual increases are likely. ...Get it here

Forecast publications

The domestic economy entered a technical recession in 2018Q2. The excitement that gripped the country in 2018Q1 is now firmly in the rear-view mirror. The short-run outlook for the domestic economy is clouded by low levels of private sector confidence, a subdued consumer demand environment, weak private sector fixed investment, and constrained fiscal and monetary policy. Add to that creeping concerns regarding global growth, and we are far less optimistic about the short-term outlook than in early-2018....Get it here

The domestic economy entered a technical recession in 2018Q2. The excitement that gripped the country in 2018Q1 is now firmly in the rear-view mirror. The short-run outlook for the domestic economy is clouded by low levels of private sector confidence, a subdued consumer demand environment, weak private sector fixed investment, and constrained fiscal and monetary policy. Add to that creeping concerns regarding global growth, and we are far less optimistic about the short-term outlook than in early-2018....Get it here

Excel sheets summarising the forecasts published in the latest issues of Economic Prospects (2-year quarterly forecast) and Economic Outlook (6-year annual forecast). Where possible, the forecast sheets have been updated with the latest available information.

...Get it here

Excel sheets summarising the forecasts published in the latest issues of Economic Prospects (2-year quarterly forecast) and Economic Outlook (6-year annual forecast). Where possible, the forecast sheets have been updated with the latest available information.

...Get it here

Medium-term prospects for the SA economy have improved. Mostly, this stems from notably less concern about domestic politics and the policy environment....Get it here

Given the lack of visibility on politics and the recent negative experience, we have stuck to a conservative medium-term real GDP growth outlook of only 1.6%....Get it here

Snapshot

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Graphs of the latest monthly and quarterly South African economic and financial data. The focus is on the essential indicators to give the reader a quick overview of general economic conditions....Get it here

Weekly

Domestic headlines last week were focused on the resignation of Nhlanhla Nene as finance minister and the appointment of former Reserve Bank governor Tito Mboweni as his replacement. Along with the gyrations of the US dollar, much of the local currency’s fluctuations were tied to these developments, especially with the Medium Term Budget Policy Statement (MTBPS) looming . Meanwhile, on the global data front, inflation pressure eased in the US in September. Both producer and consumer inflation recorded slower growth on an annual basis. ...Get it here

In a quiet week on the domestic data front, local financial markets took direction from US dollar strength and higher US bond yields. In the domestic section, we unpack the latest vehicle sales data. We also discuss the BER’s revised forecast for real GDP growth for the period 2018 to 2020. The combination of weak GDP prints in 2018H1 and several other adverse developments have necessitated a significant downward revision to our outlook for 2018/19. In the international section we discuss the latest non-farm payroll report out of the US, which points to continued improvements in the labour market. We also look at the latest reading for the JP Morgan Global Manufacturing Purchasing Managers’ Index (PMI) for a clue regarding the stance of the global economy. ...Get it here

There was a raft of domestic data releases last week, including the Absa Purchasing Managers’ Index (PMI), and Producer Price Index (PPI) and employment data from Statistics South Africa (Stats SA). These data releases, among others, are unpacked in the domestic section. On the international front, we discuss the latest interest rate decision by the US Federal Reserve (Fed). The Fed hiked its main policy interest rate and the accompanying statement suggest that further gradual increases are likely. ...Get it here

Domestically, the focus was on the interest rate decision by the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) yesterday. Concerns about the weak state of the real economy and (more importantly) the lack of demand-side pressure on inflation drove the MPC to keep rates unchanged. Furthermore, inflation and inflation expectations remain relatively contained. We also discuss the stimulus plan announced by President Cyril Ramaphosa on Friday morning. The international section looks at the latest consumer inflation prints in the Eurozone (EZ) and the United Kingdom (UK). The markets section unpacks reasons why the rand strengthened over the last week. ...Get it here

Last week, Statistics South Africa (Stats SA) released key data on the health of the SA economy at the start of Q3. The data proved to be a mixed bag, with mining output disappointing while manufacturing performed much better than expected. The international section looks at industrial production figures from the US, Eurozone and UK. Furthermore, we unpack the interest rate decisions of several central banks. The most remarkable decision was Turkey’s central bank call to hike its interest rate by 625 basis points. This move was welcomed by markets and also lifted spirits towards the rand – more on this in the markets section. ...Get it here

Last week saw domestic financial markets remain under pressure. The rand exchange rate weakened further as Stats SA reported that the domestic economy entered a technical recession in the second quarter of 2018. Among the economic subsectors, the contraction was most severe in the agriculture, trade and transport sectors. Only the mining and finance sectors were able to register significant positive growth. The improvement in mining came on the back of a surge in mineral exports, contributing to a trade surplus during the second quarter, which in turn led to an improvement in the current account deficit. Internationally, the latest trade data from China and the US points toward no relief of the ongoing ‘trade war’ between the two super powers. China’s trade surplus with the US reached an all-time high in August. Meanwhile, nonfarm payroll data released on Friday indicates a healthy US labour market, with accelerating wage increases...Get it here

Civil contractors remain pessimistic as reflected by the FNB/BER Civil Confidence Index which, at 17, has been below 20 for more than a year.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) remained virtually unchanged at a very weak level of 43.2 points in September 2018. The latest figure dashed any hope that the sharp PMI decline in August was a once-off occurrence. The average level of the PMI in the third quarter was 46 index points, which is the lowest average since the third quarter of 2017 and 3.5 points below the average recorded in the second quarter.

Following a new president inspired jump in the RMB/BER Business Confidence Index (BCI) to 45 in the first quarter, sentiment fell back to 39 in the second quarter and 38 in the third quarter. Although confidence rose marginally in two of the five sectors covered in the survey, not a single sector in the third quarter had a number above the neutral level of 50 – an infrequent and worrying development.

After skyrocketing to an all-time high during the first quarter of 2018, the FNB/BER Consumer Confidence Index (CCI) dipped marginally in the second quarter. Since negative corrections have typically followed large spikes in the CCI in the past, we are somewhat surprised that consumer confidence levels remained so high following the unparalleled surge in consumer sentiment during the first quarter of 2018. Furthermore, there were several adverse developments in recent months that had the potential to deflate consumer confidence. Although the elevated consumer confidence level suggests that consumers remain most willing to spend their money, this does not necessarily imply that actual consumer spending remained robust during the second quarter. Household income levels and/or access to credit would have had to improve in conjunction with the positive sentiment to see strong household expenditure growth during the second quarter. Although the seeds of an economic recovery were planted with President Ramaphosa's "new dawn" and pledge to eradicate the scourge of corruption, further investor-friendly reforms are urgently needed to boost economic growth and household income levels to avoid bitter disappointment.