Interesting Articles

Retail sales rose 0.6% month-on-month in February, below consensus. With consumer Covid savings depleted, the US consumer is under pressure. Money and credit growth are weak, delinquency rates are rising for non-mortgage debt and banks have continued to tighten lending standards. Non-mortgage debt payments have surged (Chart) and for the first time on record, interest payments on non-mortgage debts are as high as mortgage interest payments. This will constrain consumer spending and confidence. Read more

These rising costs are due to an escalating interest environment, struggling economic growth and, of course, wastage and corruption in government. A comparison with other middle income countries shows that South Africa’s debt levels are significantly elevated. We are some 20 percentage points above the mean and median of the debt-to-GDP ratios in the sample below, in the unfortunate company of other struggling nations such as Argentina and Pakistan. Read more

The real story for me lies in South Africa’s relative economic growth levels. If we look back at 2021, world GDP growth was 6.2%, emerging markets (EMs) were at 7% and South Africa was at 4.7%. Simple ratios tell us that in 2021 the world was growing 0.32 times faster than South Africa and EMs 0.49 times faster. Now fast forward to 2023, when the world grew 3.7 times faster and EMs 5.7 times faster than South Africa. 2024 is looking slightly better, but the rest of the world and EMs are still growing 1.9 times and 3 times faster than us, respectively. Read more

The Department of Water and Sanitation Blue Drop Report for 2023 reported that 46% of the water supply system in South Africa is undrinkable. Dr Anthony Turton of the University of the Free State said that 90% of the country’s wastewater works are to some extent dysfunctional.The state attorney’s office sent an inquiry to the Department of Home Affairs asking why the visa backlog continues to grow, now sitting at close to 100 000 applications. Read more

A victory that lifted a nation’s spirit: I had the incredible opportunity to attend the Rugby World Cup 2023 final in Paris, and what a privilege it was to watch our team triumph! The Springbok victory felt like a much-needed escape from the many troubles our beloved nation faces. A real transformation is underway in Saudi Arabia: The progress of Saudi Arabia, especially Riyadh, in the last six years has been remarkable. It is rapidly becoming the new Dubai, with a growingemphasis on women's empowerment. Read more

The Hamas attack and Israel’s response to it have taken a heavy human toll, and more lives will be lost if the war spreads. United Nations Secretary-General Antonio Guterres warned that the Middle East is on the “verge of the abyss”. The war between Israel and Hamas introduces a new geopolitical risk for global investors, on top of the ongoing Russian-Ukraine war, and increases the probability of higher oil prices driving markets into recession. Read more

September was a month of further market pressure as oil prices rose to a 10-month high, raising concerns that an energy price shock will weigh on growth. Nonetheless, the Organisation for Economic Co-operation and Development raised its global growth forecast for this year to 3.0% from 2.7% in June in its Economic Outlook report, noting that the global economy is set for a slowdown in 2024 as interest rates weigh on economic activity and China’s rebound disappoints. Read more

Professor Bhorat is an Economics professor at UCT, where he also directs the Development Policy Research Unit. He serves on President Cyril Ramaphosa's Presidential Economic Advisory Panel, playing a critical role in SA’s economic development strategy. His extensive research encompasses labour economics, poverty and income distribution. He has co-authored several books and has published over 150 academic articles, books and working papers and was recently appointed to the editorial advisory board of the World Bank Economic Review. Read more

Global markets rallied on more good news about inflation and the prospects of a soft landing. The International Monetary Fund (IMF) July World Economic Outlook was slightly more upbeat than April, with global growth revised up to 3% for 2023 and 2024. Inflation is coming down and should continue to do so (though not in a straight line). This is positive for markets, as it suggests that central banks may not need to raise interest rates as aggressively as expected. Read more

Markets performed well in June, buoyed by the raising of the US debt ceiling, falling energy prices and resilient economic growth. However, this resilience will lead to higher inflation for longer and a longer pause in interest rate hikes by the Federal Reserve (the Fed). It is therefore important to focus on what global policymakers do, rather than on what they say. The Fed maintained a hawkish tone but did not raise rates in June. Read more