Economists say the country’s economic climate will improve in 2019 although not at the rate seen 10 to 15 years ago.
Economists have painted a fairly improved picture and expect interest rates to rise, but the political climate to stabilise after elections.
The South African Stock Exchange (JSE) opened its first day of trading for 2019 slightly volatile. The Rand strengthened against a basket of currencies at opening of markets.
The South African economy had a dismal year in 2018. Economist expect the economy to improve this year but much of the underlining factors impacted on the economy last year still exists.
US President Donald Trump indicated that progress had been made toward a potential settlement of trade tensions with China, boosting some emerging markets that have been wobbled by the potential impact on global growth.
Efficient Group economist Dawie Roodt says, “2019 could be more or less the same or slightly better, but don’t expect fireworks in 2019. A couple of factors are important, the first major one will be the state of the nation by the President and will try to paint a good picture on what can be expected in the South African economy and he has to be careful, because the elections are also around the corner.
The second most important development happening is the budget in February and I’m afraid that is going to be very bad news.”
Roodt believes the Reserve Bank will have to increase interest rates at per with international economies…
“Interest rates are going up internationally and the Federal bank in the US, European Central bank and the bank of japan will either likely continue or start of further tightening of monitory policy and rates are likely to keep going up internationally and that is likely to affect things like the exchange Rand of the rand and force the Reserve Bank to increase interest rates. The second thing going on is the trade war and the more that goes on the more it will impact on the currency especially of emerging economies. I’m not too concerned about that but its something that can effect emerging economies like South Africa.”
Economists believe the country’s economic situation will improve after elections. Consumer and business confidence remain weak
“The reality is that state finances are in really big trouble and that means that the state either has to spend less or taxes will have to keep going up. In the meantime debt levels are unsustainable and there is a really good chance that we could see further downgrade and confidence for consumers and business are likely to remain depressed, although there is a bit of possible uptick or expectations improve because of political changes in South Africa. So if you’re looking for a silver lining I guess the best time to look or that will be until after the elections .”
