President Ramaphosa announced the South African Economic Reconstruction and Recovery Plan (SAERRP) in a joint sitting of parliament yesterday. The plan could be viewed as a partial implementation of the National Development Plan (NDP) with a few new initiatives that respond to the impact of covid-19 on the economy and jobs. We assess the SAERRP as positive subject to a robust implementation. ...

The International Monetary Fund (IMF) released its October World Economic Outlook (WEO) yesterday with upwardly revised global economic growth forecasts. The global growth is now expected at -4.4%, up from -5.2% projected in its June WEO Update, largely reflecting better than expected outcomes in second quarter economic growth for advanced economies. Upward revision to 2020 economic growth has been partially offset by downward revision to 2021 economic growth, which is now expected at 3.9% from 4.8% five months ago, reflecting the expected impact continued social distancing measures.   ...

The range of forecasts for South Africa’s economic growth are wide, but there is some consensus on how bad the contraction will be. The most optimistic of the forecasts is for a 7.2% contraction in 2020 from the National Treasury’s Adjustment Budget in June and the World Bank’s forecast released last week. Admittedly, the National Treasury’s forecast will likely be revised in the Medium-Term Budget Policy Statement (MTBPS) on the 21st of October. The Bloomberg consensus is at -7.6% while the Reuters consensus is at -8.0%. The International Monetary Fund projects a contraction of 8.0%. The most pessimistic is the Bureau of Economic Research at Stellenbosch University with a forecast of -8.7% followed by the SARB at -8.2%. On average, the expected contraction this year is 7.9% before recovering to an average of 3.2% in 2021. ...

This article was first written for and published in the Business Day on 09 October 2020...

The South African Reserve Bank (SARB) Monetary Policy Review (MPR) released this week showed that the bank expects the economy to return to 2019 levels only after 2022. But I think the SARB may be too optimistic given the structural constraints to economic growth and the uncertainty about the planned fiscal consolidation path by the National Treasury....

A common and natural question that arises is what will be the catalyst for this much needed foreign investment that will drive growth and job creation? I can think of a couple of things, that are new, but they haven’t happened. ...

The recovery of South Africa’s economy requires economic reforms as a prerequisite. Economic reforms will build the confidence of domestic investors, which will crowd in foreign investors. For the past decade, foreign investors have been leaving the country and now they are waiting on the side-lines, waiting for economic reforms. ...

Markets have underperformed across the board in September. Two issues seem to have driven this underperformance:  concerns about a second wave of covid-19 infections across some large countries and the uncertainty regarding US elections. ...

The Absa Manufacturing Purchasing Manager Index (PMI) – a measure of sentiment in the manufacturing sector continued to improve in September. It recorded 58.3 points following 57.3 points in the previous month. ...