We give our initial reaction to the budget – there are some positives for local markets
• The Treasury targets faster fiscal consolidation for the current year and the medium term
• Delivery risk will be linked both to the external environment a...
• The South African Reserve Bank (SARB) has raised its repo rate by 50bps to 5.5% for the first time since the 2008-09 global economic crisis. Although there was a modest downward adjustment of growth forecasts for 2014 and 2015, revised SAR...
• Growth should remain strong in 2013, boosted by high government spending and low interest rates
• An expansionary fiscal policy will continue to contribute to a widening fiscal deficit, estimated at 6.4% in 2013
• Deterioration in South African ...
• Local fundamentals are likely to prevail now that some element of an early tapering of QE is priced in
• We remain Overweight FX and duration on Nigeria on supportive fundamentals and valuations
• We also maintain an Overweight duration stance o...
• Weaker momentum in the domestic economy and a still-sluggish external environment suggest softer growth. We cut our 2013 GDP growth forecast to 2.2%, from 2.7% previously
• Given a substantial negative output gap, South African interest rates are...
• Growth momentum in Sub-Saharan Africa remains largely positive, despite uncertainty related to Fed tapering expectations and slowing trend growth in China
• African economies will not be impacted uniformly by a reduction in QE. More liquid marke...
• Prospects in the Sub-Saharan African region remain largely positive, despite uncertainty related to market expectations of Fed tapering, and a slowdown in China’s growth trend to more sustainable levels.
• South Africa is more susceptible to glob...
• We expect the Reserve Bank to keep rates on hold today; we see a 30-40% chance of a cut
• A 50bps cut would not change our market view: Overweight ZAR rates, Underweight ZAR FX
• We stay Underweight on FX as risks from the mining sector and the...
• Barring any new supply-side shocks, 2013 growth should improve on the 2.5% recorded in 2012
• Higher public-sector investment and accommodative monetary policy should support growth
• A more competitive ZAR is key to South Africa’s recovery pro...
South Africa surprises negatively with a deficit estimate of 5.2% of GDP in FY13
• While weak revenue is a key driver, expenditure restraint is nonetheless evident
• Further rating action is possible if growth does not improve
• We maintain a nea...
• South Africa is set to announce lower growth forecasts in Thursday’s MTBPS
• However, expectations of near-term deficit deterioration appear overdone
• The Treasury is under pressure to respond to rating-agency concerns
SARB surprises markets with a 50bps rate cut, taking the repo rate to 5%
• While downside risks predominate near-term, future imbalances are still a concern
• Further rate easing is unlikely, unless global conditions deteriorate meaningfully...
Top 3 data/events
• South Korea/Taiwan – Reversal in capital inflows to Taiwan and Korea in April
• India – WPI to print below 7% for a third month in succession
• United States – Inflation remains well-behaved
• Tight monetary po...
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This report provides an economic outlook for more than 60 economies worldwide and investment implications for commodities, credit, equities, FX and interest rates markets in 2014. We expect a better 2014, with world economic growth picking up and inflation staying benign. Global growth should increase to 3.5% in 2014 from 2.7% in 2013, helped by improvements in economic activity in the US and Europe. A pick-up in growth in the West is good news for the rest of the world, and we expect emerging economies’ growth to outpace G7 growth by almost 4 percentage points.
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