Tag: structural reforms

The South African Reserve Bank (SARB) recently signalled its intention to target the lower band of the 3% to 6% inflation range. Previously, the Bank adopted the mid-point of 4.5% as its formal objective in 2019. This shift shows a deliberate effort to anchor investor expectations closer to 3%. It may also reshape long-term assumptions about South African inflation as SARB focuses on targeting the lower inflation band.

The operating environment during the first half of the year was challenging. Uncertainty around US policies, especially tariffs and ongoing geopolitical conflicts, caused significant volatility in financial markets. These factors also reduced business confidence.

South Africa’s major banks maintained steady growth in 2024 despite a challenging operating climate and macroeconomic uncertainties. Combined headline earnings grew by 5.9%, reaching R119 billion. This surpassed FY23 results. The combined ROE stood at 17.5% (FY23: 17.6%). The net interest margin was 451 bps (FY23: 459 bps). The credit loss ratio improved to 89 bps (FY23: 102 bps).

As economic and political dynamics shift in 2025, the South African (SA) Rand risks signal that we could be in for a bumpy ride. However, it might not be all downhill. Looking at the major market forces at play, there are top pressures on the Rand in 2025 that will be decisive for the Rand’s performance in the coming year.

Minister of Finance Enoch Godongwana delivered his Budget Speech 2024 to Parliament and the nation on 21 February 2024. A key announcement was that tax rates will not be increased in 2024/2025, as previously signalled by the Medium-Term Budget Policy Statement (MTBPS) 2023, to generate the extra R15 billion needed in revenue.

Amidst the rising cost of living, interest rate and fuel price hikes, and load shedding, the elephant in the room remains persistently high rates of unemployment. Much fanfare tends to surround any announcement of a small decline in the quarterly unemployment rate as it did at the end of November 2022 when Statistics South Africa revealed that the official unemployment figure had decreased by one percentage point between the second and third quarters of 2022 from 33.9% to 32.9%.

As calm steadily returns after the recent social unrest, analysts are hard at work tallying the cost of the looting and disruption to economic activity. So far, the damage to 2021 growth is estimated at between 0.5 and 1.0 percentage points.

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.)