Key economic data is expected to be released in the coming week, starting with the consumer inflation data on Wednesday.
The Bureau for Economic Research (BER) at Stellenbosch University expects consumer inflation to moderate slightly in March from February. This is in line with the consensus forecast for a dip to 5.4% year on year from 5.6% in February.
BER economist Tracey-Lee Solomon said that looking further ahead, inflation was likely to have peaked in February, but persistent upside pressure meant inflation could remain sticky and dip below 5% only in the second half.
This is consistent with what is happening in the US, where consumer inflation in March exceeded the consensus forecast for the second consecutive month. This has resulted in economists scaling back their forecasts for when the US Federal Reserve will cut rates. As SA’s dependency on foreign capital was 15.5% in the fourth quarter, this means that the Reserve Bank is likely to wait until the US cuts its policy rate before cutting the local repo rate.
Also expected to be released on Wednesday is the retail sales figure, one of the key indicators of economic performance. The country’s retail market was R1.61-trillion in 2022, and the market is expected to grow at more than 4% between 2022 and 2027, according to a market research report
Retail sales have had a slow start to the year, as households remain low on cash — a signal that tight monetary policy will continue to weigh on consumer pockets in the first half of 2024 before conditions ease.
As part of its spring meeting, the World Bank is expected to host a session on Wednesday on energising Africa. According to the bank, over half-a-billion people on the continent are at risk of being left behind with access to electricity by 2030, with close to 400-million of them living in strife-torn and conflict-ridden areas.
SA and its neighbours in the Southern African Development Community (Sadc) are already feeling the impact of an unreliable energy system.
“Without access to reliable, affordable and sustainable energy, the region will not reach development aspirations of achieving an economic transformation that can lift millions out of poverty,” the World Bank said.
Internal trade data, to be released on April 18, will help to confirm whether the better-than-expected February manufacturing and mining data were an anomaly or whether they signal a broadening in the economic recovery as load-shedding moderates.
Nedbank expects a moderation in the contraction in real retail sales to 1.3% year on year in February after a 2.1% year-on-year decline in January. February was a leap year, with one extra day, which means a significant 3.6% year-on-year increase time to shop.
It may be one of the reasons the BER is expecting a year-on-year rise in motor trade sales in February. In January, real motor trade sales rose by 2.4% year on year after a 2.5% drop in December.
Wholesale trade data, civil cases for debt and building plans complete the Stats SA release calendar of the week.
Internationally, the focus will be on the IMF and World Bank meetings in Washington, which start on Monday and last until Saturday. SA will be in the spotlight on Friday when the IMF presents its regional outlook for Sub-Saharan Africa. A better outlook on load-shedding could see the IMF lift its 2024 real GDP forecast of 1%.
In the US, the focus will be on bank earnings and the concomitant earnings calls. Provisions for credit losses can provide a window into how well banks expect the economy to hold up and will shed light on the viability of commercial real estate a year after several large US banks closed. Ratings agency S&P Global recently downgraded its outlooks for five regional US banks to due to their exposure to commercial real estate.
Consumer spending will also be in the spotlight, while economists will peruse the CEO comments on the macro situation and their expectations for rate cuts.
In China, there will be a slew of data releases that will show how the economy is faring. The most important one is first-quarter GDP, with economists expecting a slight easing to 5% from the 5.2% year-on-year gain in the fourth quarter.
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