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Economic Insights
Although debt servicing costs as percentage of household incomes has risen to 9% since the Reserve Bank’s decision to follow a restrictive monetary policy approach, higher employment and salary levels have boosted the AFHRI.
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A large measure of divergence in the performance of global currencies against the US dollar was evident in March, clearly as a result of key US economic data sets sending out conflicting signals – a trend that has continued to baffle capital markets over the past two years.
This year’s national budget, tabled in Parliament on 21 February, will probably be best remembered for the wide-ranging differences of opinion on National Treasury’s decision to tap into the country’s foreign exchange reserves.
During October, the annualised rate of consumer inflation rose marginally to 5.9% (from 5.4% in September), but there should be no need for alarm over any further significant increases in the general price level. It should be noted that October was a difficult month for the rand/US dollar exchange rate, with the average hitting a level of marginally above R19.
The International Monetary Fund (IMF) has provided some cheer to South Africa by raising the country’s GDP growth projection for 2024 to 1.8%. A feature of the IMF’s latest global economic outlook, published in October, is the superior economic growth rates that are expected for emerging markets, relative to the advanced economies.
The decision by the Monetary Policy Committee (MPC) of the Reserve Bank not to raise interest rates again has provided a candidate for “good news item of the year”.
Consumers and prospective home owners would have been delighted by this week’s announcement of lower consumer inflation. The May reading of the consumer price index (CPI) came in at 6.3%, which is almost 20% lower than the peak of 7.8% recorded in July last year.
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