In the 26th of September 2022 edition of MD’s Insights, I compared South Africa’s economy with where it was relative to a year ago, and I concluded as follows: “…. most of the challenges to economic growth existed prior to the Ukraine war, with commodity prices, stable inflation rates and the absence of war at...
What a change two weeks can bring! Two weeks ago, I predicted that the Rand would continue to strengthen against the Euro given the widening inflation rate between Euroland and South Africa. At 10.00am on the 10th of this month, the rate was €1 : R17.60, but as I am writing, the Rand has fallen...
The Inflation rate in Euroland continues to rise and reached double digits at 10% during September 2022 from 9.1% in August. South Africa’s rate was 7.6% in August and the current September estimate by Trading Economics / Statistics SA is 7.4%, which, if accurate, would see the 3rd consecutive month of a declining rate. As...
The current economic reality, by and large, is being informed by Putin’s war in Ukraine, a war that is going disastrously for the man and as such it is likely to drag on for some time unless Putin is sidelined, in whatever form that might transpire. Nevertheless, it might be interesting to view SA’s economy...
The Rand has weakened against the Euro even as Euroland’s inflation rate of 9.1% is outstripping SA’s rate of approximately 7.8%. The reasons for this are varied, extensive load-shedding inhibiting production, recessionary forces at play amongst our major trading partners and slowing economic growth. Aggressive Reserve Bank interest hikes create recessionary expectations without being effective...
The Ukraine war continues to haunt global economies insofar as inflation and declining GDPs are concerned and so, for the first time since the 1970’s, stagflation has become a reality once again. Let’s consider the likely impact this will have on South Africa. The following chart (courtesy of Trading Economics) analyzes current inflation in Europe...
Putin’s war in Ukraine passes the 5th month since it began on 24th February 2022 and its effects on the world’s economies remains pervasively severe. Inflation in Euroland is now at 8.9% compared with South Africa’s 7.4%. Interest rates increase as a response, a relatively ineffective tool given that inflation is being supply- rather than...
The euro has fallen almost 12% from the start of 2022, this being almost exclusively due to Putin’s war in the Ukraine which has sent fuel prices rocketing, resulting ultimately in the inflation rate in Euroland heading beyond 6%. The ECB’s response of hiking interest rates (another.25% hike expected) makes matters worse given that such...
South Africa’s GDP increase of 1.9% in the first three months of 2022 brought the economy back to its pre-Covid19 size, reported Statistician-General Risenga Maluleke just under a month ago, also noting that during that quarter 7 out of 10 manufacturing divisions reported positive growth. Year-on-year growth to March 2022 reached 3% against Bloomberg’s forecast...
In the last Insight’s I mentioned that South Africa was, temporarily, in a relatively good space amidst the current world’s economic crisis occasioned by Putin’s war in Ukraine, with many economies on the precipice of recession. Most significantly, the Rand has shown itself to be resilient, even in the face of astronomic increases in fuel...
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