In focus this week is the SA Reserve Bank Biennial Conference, which will be hosted at the Cape Town International Convention Centre on August 31–September 1 under the theme “Post-crisis lessons and policy challenges”.
It will bring together international thought leaders to reflect on the main challenges faced by central banks and macroeconomic policymakers in the wake of the Covid-19 pandemic and new challenges to economic growth.
Bank governor Lesetja Kganyago will give the opening address ahead of the first session, “Back to target: Monetary policy in advanced countries”.
Earlier in the year, Kganyago said advanced economies would do well to look to the South for lessons as central bankers around the world grapple with high inflation and debt costs. He said emerging markets such as SA had for some time been dealing with inflation drifting above targets, unlike developed countries whose monetary policy and public dialogue about economic policy had for decades centred on zero interest rates and low inflation.
Other sessions worth noting include “SA in focus: how to improve fiscal and monetary policy co-ordination”. The session will be chaired by head of Bank economic research Chris Loewald on Friday. Edgar Sishi, the head of the budget office at the National Treasury, will be one of the main speakers.
Also on Friday IMF first deputy MD Gita Gopinath will speak on the global economy. Deputy governor Fundi Tshazibana will chair the session and lead the Q&A.
On Wednesday, the Reserve Bank will publish private sector credit extension data for July. It increased 6.25% year on year in June after growth of 6.85% the previous month, signalling business and consumers are wary of challenges facing the domestic economy.
On Thursday Stats SA will publish producer inflation data for July. Producer price inflation fell to its lowest level in more than two years — to 4.8% in June, from 7.3% in May and 8.6% in April — supported by a further deceleration in manufactured food price inflation and a substantial decrease in both the petrol and diesel price in June. But risks remain.
Nedbank economist Crystal Huntley said rand volatility has been cited as a risk as a weak currency affects import prices.
Huntley said the local unit will remain under pressure as risk appetite seesaws amid the global economic downturn and investors remain wary of SA, with the electricity shortage eroding domestic growth prospects and political rhetoric likely to harden ahead of the 2024 elections.
Also on Thursday, the nominal trade balance for July will be released. The trade balance unexpectedly switched to a R3.5bn deficit in June from a R9.6bn surplus in May. This reflected a monthly decline of 8.6% in exports to R167.62bn, while imports marginally declined by 1.6% to R171.16bn.
On Friday the Absa manufacturing purchasing managers’ index (PMI) for August will provide further clues about manufacturing conditions.
Activity remained in contractionary territory for a sixth consecutive month in July — falling to 47.3 from June’s already low 47.6 — at levels last seen in July 2021 when SA experienced deadly riots and looting in KwaZulu-Natal and parts of Gauteng sparked by the jailing of former president Jacob Zuma.
Senior economist at Oxford Economics Jee-A van der Linde said the large fall in business activity can be explained by supply chain issues relating to the transport disruptions on the N3 corridor through July.
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