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Johannesburg - The softer global economy and weak domestic business and household confidence are expected to keep South African GDP growth at 2.0% this year with a marginal pick-up to 2.8% in 2014.
“Insufficient to create desired levels of employment, but like the other emerging market economies South Africa faces the dual challenges of slowing growth and tighter global financial conditions,” head of Absa Private Client Asset Management, Craig Pheiffer, told a media briefing in Johannesburg on Wednesday.
Inflation is expected to move back into the upper end of the target range from a quarter three peak but remains susceptible to external shocks.
The South African Reserve Bank is likely to keep interest rates flat for the duration of 2014.
“For as long as inflation is not demand-driven, consumer and business confidence is low, inflation expectations are well anchored and domestic growth remains pedestrian”, he said.
The current account deficit and the budget deficit leave the rand vulnerable with potential political noise being added to the melting pot in the run up to the 2014 elections.
“We remain under the watchful eye of the ratings agencies,” said Pheiffer.
He added that developments on the medium-term budget policy front as well as the labour front will be keenly monitored over the coming months.
The developing economies are expected to grow at 4.7% and 5.0% in 2013 and 2014 respectively, while developed economies are expected to advance at a 1.1% in 2013 and 1.9% pace in 2014.
If fiscal impasse in the United States is quickly resolved Gross Domestic Product (GDP) of 1.6% is forecast for the US in 2013 from 2.2% last year with expectations of a pick-up into 2014 of 2.3%.
“But even with the US government going back to work soon, some budget compromises will need to be made in the coming months to appease all parties and that could add additional drag to the economy,” said Pheiffer.
The euro area economy emerged from recession in the second quarter of 2013 and is expected to return to a positive growth rate of 1.3% in 2014 (-0,6% in 2012).
In Japan the increase in the VAT rate from 5% to 8% in April 2014 is dominating the economic landscape.
The increase comes with ¥5 trillion of stimulus measures designed to combat the tighter fiscal policy and growth rates of 1.9% and 1.5% are forecast for 2013 and 2014 respectively.
In China, the government continues to drive a rebalancing of the economy away from asset investment towards domestic consumption.
The accepted trade-off for “elevating China to a new stage of development” is slower growth of 7.1% in 2014 from 7.6% in 2013.
Global growth expectations have been revised lower on downward revisions to the expected growth rates of developing economies, most notably in China.
- Fin24
“Insufficient to create desired levels of employment, but like the other emerging market economies South Africa faces the dual challenges of slowing growth and tighter global financial conditions,” head of Absa Private Client Asset Management, Craig Pheiffer, told a media briefing in Johannesburg on Wednesday.
Inflation is expected to move back into the upper end of the target range from a quarter three peak but remains susceptible to external shocks.
The South African Reserve Bank is likely to keep interest rates flat for the duration of 2014.
“For as long as inflation is not demand-driven, consumer and business confidence is low, inflation expectations are well anchored and domestic growth remains pedestrian”, he said.
The current account deficit and the budget deficit leave the rand vulnerable with potential political noise being added to the melting pot in the run up to the 2014 elections.
“We remain under the watchful eye of the ratings agencies,” said Pheiffer.
He added that developments on the medium-term budget policy front as well as the labour front will be keenly monitored over the coming months.
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The developing economies are expected to grow at 4.7% and 5.0% in 2013 and 2014 respectively, while developed economies are expected to advance at a 1.1% in 2013 and 1.9% pace in 2014.
If fiscal impasse in the United States is quickly resolved Gross Domestic Product (GDP) of 1.6% is forecast for the US in 2013 from 2.2% last year with expectations of a pick-up into 2014 of 2.3%.
“But even with the US government going back to work soon, some budget compromises will need to be made in the coming months to appease all parties and that could add additional drag to the economy,” said Pheiffer.
The euro area economy emerged from recession in the second quarter of 2013 and is expected to return to a positive growth rate of 1.3% in 2014 (-0,6% in 2012).
In Japan the increase in the VAT rate from 5% to 8% in April 2014 is dominating the economic landscape.
The increase comes with ¥5 trillion of stimulus measures designed to combat the tighter fiscal policy and growth rates of 1.9% and 1.5% are forecast for 2013 and 2014 respectively.
In China, the government continues to drive a rebalancing of the economy away from asset investment towards domestic consumption.
The accepted trade-off for “elevating China to a new stage of development” is slower growth of 7.1% in 2014 from 7.6% in 2013.
Global growth expectations have been revised lower on downward revisions to the expected growth rates of developing economies, most notably in China.
- Fin24
