Tag: Gross Domestic Product (GDP)

A sharp fall in the rate of consumer price inflation has defanged what was initially paraded as 'aggressive' monetary policy action intended to stimulate the floundering economy. Given a muted inflation outlook, and the depressed economic setting, the question is not if the South Africa’s Reserve Bank’s Monetary Policy Committee (MPC) will cut interest rates this week, but rather by how much?

The global COVID-19 pandemic has made its presence felt in South African retail and consumer-focused businesses, especially in tourism and hospitality, but the full impact on earnings, cash flow and employment will last far longer than the initial lockdown.

The Covid-19 crisis has brought much of the world economy to a sudden stop. Millions upon millions of people are in lockdown across the world, preventing them from working, buying, producing and selling goods and services. Global and local supply chains are interrupted, and small and large companies see a collapse in income. Households are under similar pressure.

Moody’s finally dropped the sword on South Africa on Friday evening, following in the steps of fellow ratings agencies S&P and Fitch in downgrading the country’s sovereign credit rating to sub-investment grade or 'junk status'. And the COVID-19 crisis and current lockdown mean that even before factoring in the impact of Moody’s decision, the economic outlook for SA in 2020 is harrowing.

SMMEs play a fundamental role in the growth of a country’s economy. For South Africa, small and medium enterprises contribute significantly to the overall GDP and have continued to be in the front-lines of combating one of the biggest socio-economic challenges that affects the country; namely unemployment.

The confidence and hope at the recent SA Investment Conference, spurred on by the Springboks, was tangible. It’s as if that same momentum, and hope in a better future, inspired the call to action by the President. While forever there will be detractors, what’s encouraging is the level of commitment by investors, both local and international, to invest in South Africa.

With economic growth considered the main driver of corporate travel, emerging economies such as South Africa are increasingly adding to the international pool of business travellers. Predicting positive growth in 2020, analysts say there is good news for South African SMEs, whose bargaining power they see rising with the market’s size and spend.

Finance Minister Tito Mboweni delivered a macabre Medium-Term Budget Policy Statement (MTBSP) to Parliament on October 30. The MTBPS communicates to government and the people the economic context of the country and fiscal spending priorities over the coming three years. (It does not include detailed spending plans or tax proposals, which are left to the main budget in February.)

With GDP up 3.1% in the second quarter of 2019 (seasonally adjusted, annualised) and 0.9% for the year to June 2019, the markets have responded positively. The rand appreciated by some 10 cents on publication of the data and bonds yields declined by about 10 basis points.

South Africa’s equity market capitalisation equates to more than 200% of the country’s gross domestic product (GDP), the highest proportion in the world and a level that is simply not sustainable.