FNB Economics Weekly – 28th of October 2016

– SA: The economic outlook since the delivery of the Budget review early this year has been more disappointing than the National Treasury (NT) had anticipated. NT now expects GDP to slow to 0.5% in 2016, down from 0.9% previously.
– SSA: The Central Bank of Mozambique hiked the repo rate by an astonishing 600 bps to 23.25%. This is the fifth rate hike this year and puts the year-to-date increase up 1350bps.
РGlobal: Japan recorded a trade surplus of JPY 498.3 billion in September, however, headline inflation remained unchanged at Р0.5% y/y. US durable goods orders contracted 0.1% m/m in September; and lastly, China’s property market continues to surge as housing prices of newly built homes accelerated 11.2% y/y in September compared to 9.2% in August.

Attention fell on the delivery of the MTBPS last week. In FNB’s assessment, the additional consolidation measures announced in the MTBPS provide further evidence of a strong commitment to reduce the fiscal deficit and stabilize debt. However, fiscal consolidation is only part of the problem.

Growth initiatives that generates tax resources, rendering the fiscal adjustment process less painful and more sustainable, were lacking. Further, there is nothing in the MTBPS that suggests that South Africa should revise up the admittedly low medium term growth expectations.

Read more here: Economics-Weekly-28-October-2016