Tag: economy

The charts below, and others like them, are frequently used online and in presentations by economist and author Stephanie Kelton. She uses them to support the Modern Monetary Theory (MMT) claim that, contrary to conventional wisdom, government deficits are not harmful. Instead, she argues they represent a gain to the economy.

Modern monetary theorists argue that nations with monetary sovereignty can never run out of money to fund projects. They can always issue more currency whenever they need it.

Times are tough, and geopolitical tensions are high in markets across the globe. South Africa is not immune to these pressures. Continued pressure on - and depreciation of - the Rand, largely driven by external factors, fuels fears and adds financial strain to a struggling economy. The economy must also contend with successive Value Added Tax (VAT) increases over the next two years.

The 2024 operating environment remained challenging, with weak economic activity. SA’s GDP growth expectations dropped to 0.5%, down from 0.7% in 2023. The first six months proved especially difficult due to geopolitical uncertainty and high interest rates. Moreover, general uncertainty ahead of SA’s national election added further pressure. These factors are reflected in the Nedbank Group Annual Results, highlighting the impact on financial performance and market conditions.

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The vidcast dives into sovereign wealth funds and how they work. We unpack the requirements for a good fund, the risks to implementation and the overall benefits to the economy. We also posture various ways of potentially implementing such a fund in South Africa.

The results are in. The African National Congress has attained 40% of the vote, the Democratic Alliance (DA) 21%, uMkhonto we Sizwe (MK) 14%, and the Economic Freedom Fighters (EFF) 9%. It is clear that some of these parties enjoy too much support in the context of a country that claims to be a constitutional state that prioritises the rule of law and which requires massive foreign and domestic private investment.

The Corporation for Deposit Insurance (CODI) finally aligns South Africa with the rest of the G20. By guaranteeing cash deposits of up to R100,000 per qualifying depositor in the event of a bank collapse, this innovative new scheme has the potential to change South Africa’s banking landscape, which is currently dominated by the Big Five (FNB, Nedbank, Standard, Absa and Capitec).

Following the events of October last year, the situation in the Middle East has become increasingly volatile. In April, Israeli forces attacked the Iranian consulate in Damascus, killing most of the Quds Force leadership. The Quds Force is part of the Iranian National Revolutionary Guards Corps (IRGC), which deals with Iran’s overseas activities and its relationships with its proxy forces in Syria, Lebanon, and Iraq.

Committing to maintaining sustainable public finances proves to be challenging amidst a geopolitically tense global environment, less favourable growth in the global economy, and persistent energy and logistics obstacles locally. These factors collectively jeopardise government revenue growth, widen the budget deficit, and increase the country's debt ratio.