STANLIB's Weekly Focus 21 July 2008

EXECUTIVE SUMMARY OF STANLIB’s WEEKLY FOCUS

ECONOMIC WEEKLY REVIEW

Ø Two elements of good news impacted the market last week; the fall in crude oil prices which helped to buffer tumbling markets; as well as the revision of global growth forecasts by the IMF (International Monetary Fund.) Their initial estimate of 3.7%y/y growth for the globe was revised up to 4.1%y/y on the basis that the impact of the credit crunch is not as severe as previously anticipated. This will give further support to high commodity prices.

Ø With reference to the falling oil price; world demand for oil is definitely slowing, especially in the US, which could ease pricing pressures further.

Ø Offshore and local markets were however inundated with negative economic indicator releases:

Ø UK and Germany PPI (producer inflation) increased in June.

· CPI (consumer inflation) increased across the board due to higher oil and food prices in June. UK 3.8%y/y, USA 5%y/y and Eurozone 4%, a new record and now at the highest level since the Euro was introduced in 1999!)

· At his semi- annual congressional testimony, Ben Bernanke (Federal chairman) discussed the many difficulties facing the US markets. Namely, the high oil price, tight credit conditions and an ever weakening housing market.

· South African retail sales continued to weaken, with the May figure now at -3.6%y/y. The weakening is fairly broad based.

· The BoJ (Bank of Japan) and BoC (Bank of Canada) kept their policy rates on hold last week, as expected, with growth estimates revised down and inflation revised higher.

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