KZN Provincial Treasury -South African Economy:2014-08-08 It was a torrid quarter, both globally and in South Africa. The outcomes, in short, underlined the stagflationary environment facing South Africa. Local growth indicators, though not recessionary, continued to show a lacklustre growth background, and many forecasts (ours included) have been downgraded to well below 3% â€" some are even below 2% â€" for growth this year. However, there has been no concomitant downgrading of inflation expectations.
The principal reason is the further sharp weakening of the rand seen during the second quarter of this year, following indications from the US Federal Reserve Bank (Fed) that it was considering ‘tapering’ its quantitative easing (QE) programme later this year. This led to concerns that the liquidity support to risky assets would be withdrawn and saw a number of assets, including South African bonds and the rand, selling off. It’s worth mentioning that various idiosyncratic developments across a number of emerging markets (including widespread political protests in Turkey and Brazil) didn’t help much, i.e. it is not only the QE news that led to weakness. The steep decline in the rand (17.5% depreciation against the dollar in the first six months of the year) and continued demands for â€" and accessions to â€" relatively high wage demands despite the poor growth and jobs picture continue to underpin our expectations of sticky, relatively high inflation this year. This comes against a background of both fiscal and monetary policy remaining accommodative. Click on below link to view article: Inflation nflation expectations The average inflation expectations of analysts, business people and trade union officials for the current and next two years remained unchanged compared to the previous survey. Click below link to download survey of inflation expectations Q2 2014:
Inflation Expectations 2014Q2.pdf - 0.4 Mb
Snapshot 2014-08.pdfAnnual CPI inflation stable at 6.6% in June After accelerating for five consecutive months, headline consumer price inflation remained flat at 6.6% year-on-year (y-o-y) in June. This was slightly below market expectations. On a monthly basis, prices increased by 0.3%. The main contributor to the monthly figure was the housing and utilities category, which added 0.2 percentage points (%pts). Both actual and owner’s equivalent rentals were surveyed during June, with the former rising by 1.5% month-on-month (m-o-m) and the latter by 1.3% m-o-m. Monthly food price inflation continued to moderate, although at 9.2% yo-y, annual inflation in this category remains elevated. Core inflation (which strips out food, petrol and energy prices) increased marginally to 5.6% y-o-y from 5.5% in May. There is some evidence of increased pass-through from the weaker rand, with prices of durable and semi-durable goods with high import content increasing over recent months. Click below link to download BER Economic Snapshot: Click below link to download the Adcorp Employment index:
Adcorp Employment Index - 201407.pdf - 0.2 Mb
Click below link to view GSB/Sake24 Consensus poll for June 2014:
Beeld_Jun14.pdf - 0.1 Mb
Click below link to view ABSA SME Index:
ABSA SME Index - 2014.pdf - 0.3 Mb
Dr Clive Coetzee General Manager: Infrastructure Management and Economic Services KZN Provincial Treasury Economist (PhD UKZN) 033 897 4538 http://www.kzntreasury.gov.za/ |
KZN Provincial Treasury -South African Economy:
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