South Africa’s economy remains stuck

Wealth

South Africa’s economy remains stuck 

Adding to pressure on the government to implement reforms to lift business confidence and boost growth.

The economy entered the 70th month of a weakening cycle in September, according to the Reserve Bank’s Quarterly Bulletin released on Wednesday. That is as economic growth and business confidence languish at multi-year lows, while an index-gauging sentiment in the manufacturing sector shows contraction.

Reacting to the subpar economic growth, President Cyril Ramaphosa appointed an economic advisory council to smooth policy implementation. The independent body, chaired by Ramaphosa, brings together economists and technical experts drawn from academia, the private sector, labour and other constituencies.

In global news, Chinese negotiators will travel to Washington to resume their high-level trade talks on 10 and 11 October. Market speculation is running high that a deal is in the works that would see the US postpone tariff increases scheduled to take effect in mid-October and in December, in exchange for China’s commitment to making significant purchases of US agricultural products. This would be a positive signal for global growth, and markets should respond positively. 

Local equity markets lost 1.97% in value for the week but returned 0.89% for the month. Financial counters were the major contributors to the monthly numbers, driven by movement in the currency and positive inflation data. The rand lost some ground against the US dollar in the past week, but on a month-to-month basis, the currency is somewhat stronger. 

Most global markets took a breather the past week. The S&P 500 lost 1.01%, the Dax 0.75% and the Shanghai 2.47%. 

The price of Brent Crude oil dropped by 3.09% to $62.63 per barrel, which will have an impact on the local fuel price. The price of 95 octane petrol will go up by 18 cents a litre, while 93 will cost 4 cents less a litre. Diesel will increase by 25 cents per litre.

Markets remain volatile while the world looks to the US and China in the hope of reaching an agreement on the trade impasse. 


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