Our monthly To the Point column by economist Dr Roelof Botha offers in-depth analysis and commentary on the latest economic trends, market developments, and financial news. Designed to keep you informed and ahead of the curve, each edition delves into key economic indicators, explores their impact on global and local markets, and provides insights to help you navigate the ever-changing economic landscape.
- News
- To The Point
Our monthly To the Point column by economist Dr Roelof Botha offers in-depth analysis and commentary on the latest economic trends, market developments, and financial news. Designed to keep you informed and ahead of the curve, each edition delves into key economic indicators, explores their impact on global and local markets, and provides insights to help you navigate the ever-changing economic landscape.
- News
- To The Point
Households and businesses with debt would have been disappointed at the decision by the Monetary Policy Committee (MPC) of the Reserve Bank to maintain the official bank rate at 8.25% (and the prime rate at 11.75%) during their July policy meeting. Fortunately, some good news filtered through less than a week later with the publication by Statistics S.A. of the latest inflation rate, as measured by the consumer price index (CPI). This rate declined marginally to 5.1% in June (from 5.2% in May).
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The decline of more than 140 basis points in South Africa’s ten-year bond yield in the aftermath of the recent elections holds the promise of hastening the imminent lowering of the Reserve Bank’s repo rate. The chances for an easing of lending rates happening sooner rather than later have also improved for other reasons, mainly because of further declines in the producer price index (PPI) and the food price index, both of which act as leading indicators of the consumer price index (CPI).
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A welcome year-on-year increase in capital expenditure by selected private sector industries was recorded in the first quarter of 2024, with the asset category for plant and equipment once again in pole position. Between January and March, this asset group witnessed capital expenditure of almost R52 billion, a slight increase over the figure of R51 billion recorded in the first quarter of 2023.
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In June, the Absa/BER Purchasing Managers’ Index (PMI) for business expectations in manufacturing for the next six months reached its highest level since February 2022, with a reading of 68.1, significantly up from the previous 24-month average of 53.2. This improvement reflects a strong recovery in manufacturing sales and a renewed optimism in the economy, bolstered by a historic transition to a government of national unity committed to good governance and economic growth
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The recent recovery of mineral prices is beneficial for South Africa's economy, which relies heavily on commodity exports for foreign exchange earnings. Since the lows of March and April, the prices of South Africa's top six minerals have increased, with manganese rising by 36%, gold reaching record levels, and platinum, iron ore, and coal all experiencing price increases above 5%. Chromium ore has also seen a slight price rise.
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One hour before the inauguration of President Cyril Ramaphosa for a second five-year term as head of state, South Africa’s currency had broken through the R18 level against the US dollar for the first time in almost a year, trading at R17.94.
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South Africa’s manufacturing sector sales performance continues to reach new record high levels, with a cumulative figure of R1.1 trillion achieved between January and April. It is the second successive year that manufacturing sales breached the R1 trillion level within merely four months.
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Statistics SA has released the GDP figures for the first quarter of 2024, once more confirming that economic growth remains in place, albeit at a snail’s pace. According to Statistics SA, the year-on-year real growth rate in the country’s GDP amounted to 0.5% in the first quarter of 2024, following an increase in total production of 1.4% in the fourth quarter of 2023.
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May has been a positive month for South Africa's tourism industry, highlighted by significant improvements in the Travel & Tourism Development Index (TTDI) and impressive rankings in the International Congress and Convention Association (ICCA) global conference popularity rankings. After a two-year hiatus due to the COVID-19 pandemic, the ICCA resumed its rankings based on in-person meetings, with South Africa placing 41st among 180 countries and Cape Town ranking 63rd out of over 1,200 cities, surpassing cities like Rio de Janeiro, Washington, and Los Angeles.
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April saw a welcome recovery of two key Purchasing Managers’ Indices, perhaps signalling a measure of stabilisation of economic conditions in South Africa.
- News
- To The Point
April saw a welcome recovery of two key Purchasing Managers’ Indices, perhaps signalling a measure of stabilisation of economic conditions in South Africa.
