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The growth of the average disposable salary in South Africa is 1% after inflation – which is positive real growth thanks to civil servant salary increases and backdated payments in June.
It is clear that the South African Reserve Bank (SARB) remains aware of the potential negative local effect of a rise in US rates should the US decide to hike rates this year. In the event that global capital flows to emerging markets (including South Africa) are negatively impacted, the rand could weaken further, potentially raising inflation expectations, which are already above the upper-end of the target band for the price-setters of the economy, namely businesses and trade unions.
Currency exchanges are notoriously difficult to forecast, with the ongoing ‘currency wars’ bringing increased turbulence. This is according to Denzil Burger, Portfolio Manager at MacroSolutions, a boutique of Old Mutual Investment Group, who believes that cheap currencies do not necessarily make good buys and the rand, at its current levels, may not actually be as cheap as it appears to be.
South Africa recently hosted a meeting of the World Economic Forum (WEF) where a number of international speakers gave some insight into the current state of the international economic landscape. The role of Africa in this landscape was also given particular attention.
If you had to hazard a guess, when do you reckon the COFI Bill will be signed into law?