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Four times the economy showed us flames this week

May 13 2018 12:16
Tehillah Niselow

Johannesburg- Amidst increased optimism for South Africa’s economic growth in 2018 by Goldman Sachs and Harvard's Centre for International Development, several data releases this week show that the first few months of the year were far from rosy.

Fin24 took a look back at the week that was.

Business confidence back to pre-Ramaphosa levels

The South African Chamber of Commerce said on Wednesday that the Business Confidence Index (BCI) for April 2018 declined by 1.6 index points from 97.6 in March 2018 to 96.0 in April 2018.

It was previously at a level close to this in December 2018, before Cyril Ramaphosa’s election as president.

However The BCI in April showed improvement by 1.1 index point year-on-year compared to 2017.

Lower merchandise export volumes, fewer new vehicle sales and the weaker rand were some of the negative monthly contributions to the April business climate.

The BCI has kept to levels above 95.since November after falling to apartheid era levels of confidence in August.

Mining production fell the most in two years

According to data by Statistics SA Mining production in March contracted the most in two years, decreasing by 8.4% year-on-year.

The mining industry has been under pressure in recent years due to policy uncertainty and weaker commodity prices

Manufacturing production slides

Manufacturing production fell 1.3% in March year-on-year with sectors such as clothing and electronic items hardest hit, sliding by over 10%.

The declines in both manufacturing and mining figures do not bode well for GDP growth in the first quarter which is expected to be released by Stats SA soon.

Brent Crude oil price soars

The price of Brent Crude oil price reached highs this week, last seen in 2014, after US president Donald Trump announced an end to the Iranian nuclear deal.

This will see the US re-impose economic sanctions on the third largest member of the Organisation of the Petroleum Exporting Countries (OPEC).

While Bloomberg reported in April that a softer oil price will translate into a weaker rand, consumers are feeling the pinch with two successive fuel hikes in April and May.

The Bank of America Merrill Lynch said on Thursday that Brent Crude oil could reach $100 a barrel in 2019, due to strong global oil demand falling inventories, and geopolitical issues from Iran to Venezuela.

A barrel of Brent traded at $77.15 on Friday at 5:10pm.

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