Tag: Herman van Papendorp

Following President Cyril Ramaphosa’s State of the Nation Address (SONA), we have released an analysis of the speech. SA has registered 3.6 million cases of COVID-19 and just over 96,000 deaths to date.

Despite perceiving the overall risks to CPI as on the upside, all five members of the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 3.5%. The repo rate has been on this level since 23 July 2020.

All five members of the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 3,5%. It has been on this level since 23 July 2020. The MPC viewed the overall risks to the Consumer Price Index (CPI) outlook to be on the upside compared to balanced in the March 2021 statement. This means the MPC’s interest rate outlook is more hawkish.

When the minister of finance delivered Budget 2020/21 on 26 February 2020, COVID-19 was mostly contained to China (with other countries registering few cases). The budget therefore made virtually no provision for what was to become one of the largest health and economic meltdowns in the past 90 years. As such, except for the growing fiscal deficit, the main and consolidated budgets[1] contained no earth-shattering announcements.

Global financial markets whipsawed in 2020 in reaction to a devastating COVID-19 pandemic and the subsequent decisions taken by governments and policymakers to protect citizens and keep economies afloat. Higher levels of uncertainty were reflected in the initial spike in the CBOE Volatility Index (Vix) in March 2020 before unprecedented fiscal and monetary stimulus calmed markets during the year. 

Real growth in GDP for the third quarter of 2020 surprised the market consensus to the upside in line with a further relaxation in lockdown restrictions on mobility and activity. Growth surged by 66.1% q/q saar in the quarter and exceeded the November 2020 Reuters Econometer median growth forecast of 34.6% q/q saar.

Moody’s and Fitch downgraded SA’s foreign-currency sovereign rating and its local-currency rating.

The South African Reserve Bank (Sarb) Monetary Policy Committee (MPC) kept interest rates steady at 3.5% at the scheduled September 2020 interest rate-setting meeting despite downwardly revised growth and inflation views. This decision tied in with the view of 15 out of the 25 analysts surveyed by Reuters, while we were one of the ten favouring a 25-basis point cut.

Real GDP surprised the market consensus to the downside in the second quarter of 2020 as the effects of the pandemic and the associated lockdown measures ate into economic activity. Growth contracted by 51% q/q saar and printed lower than the August 2020 Reuters Econometer median growth forecast of 44.5% p/p saar.

The Bureau of Economic Research released the Business Confidence Index (BCI) for third quarter of 2019. The index plummeted to a 20 year low of 21 index points. The BCI remained unchanged between the first and second quarter of 2019, before weakening in the third quarter. The BCI has trailed below the 50 neutral mark (a value above 50 signals optimism and pessimism is indicated when the value dips below 50) for the 19th consecutive quarter.