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Research Notes are more in-depth analyses undertaken by BER economists and consultants.
Brief note intended as a more regular interface with our clients.
In-depth analysis of important political developments in South Africa.
The Impumelelo Economic Growth Lab is a unit at the BER, focussing on generating policy-relevant work and capacity building to achieve economic success in South Africa. This work is freely available to access on our website.
The aim of the present follow-up note (on the Comment release last Friday) is to provide some assessment of the current rand exchange rate depreciation and outlook, as well as to outline the quantum of impacts which may result in the event of a crisis scenario. It has to be emphasised, that we remain in the realm of a ‘what-if’ scenario. The objective remains to provide information that will facilitate planning in what can otherwise only be described as extraordinary.
Read MoreIn the BER’s latest Comment the aim is to provide some assessment of the current global financial meltdown, the associated global economic downturn and the likely impacts on the local economy. The economic forecasts provided here cannot fully discount the possible impacts given the extreme financial destruction and volatility of the moment. The risks highlighted throughout the note are as important as the numbers, if not more so. We hope to provide a fuller and more detailed picture in our forthcoming Economic Prospects (4th Quarter 2008) report planned for release later this month.
Read MoreAs expected, the SA Reserve Bank kept the repo rate unchanged at 12% following its August 14 rate meeting. In our view, the decision signals the end of the interest rate tightening cycle, which saw rates rise by a cumulative 500bps since June 2006. The BER expects that the next rate move could be down, starting in mid-2009. At this stage, interest rates are likely to be cut by 150bps in the second half of 2009.
Read MoreThe April inflation numbers again exceeded expectations – CPIX inflation came in at 10.4% and PPI at 12.4%. Juxtaposing the shocking inflation picture is finally more convincing evidence of the real economy buckling under the pressure from higher inflation and interest rates, electricity outages and a weaker global economy. While the current growth trajectory has been in line with our expectations, the latest inflation numbers have exceeded expectations by a substantial margin, mainly due to international oil prices scaling new and unforeseen highs above $130/b. The rapidly deteriorating inflation outlook (also discounting stiff electricity price increases) has prompted aggressive monetary policy statements. The domestic capital markets are currently pricing in a full percentage point hike in the repo rate at the 11/12 June MPC meeting. The BER has revised its inflation forecast upwards (10.5% in 2008 and 6.8% in 2009) and down scaled its growth forecast in respect of 2008/9 to 3.3% and 3.2% respectively (from 3.4% and 3.8% in April 2008) on the assumption of only a 50 bps hike in interest rates in June.
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