A short economic calendar awaits SA this week with much of the market’s attention still centred on political developments around the VAT reversal and government of national unity (GNU) discussions.
The trade surplus is expected to have narrowed to R14.9bn in March, down from R20.9bn in February, with imports outpacing exports, Nedbank economists said.
While higher gold prices and front-loaded US demand ahead of new tariffs provided some support to exports, muted demand from key partners and softer commodity prices likely weighed on overall performance.
On the import side, lower inflation and improving real incomes continued to boost import demand, leading to a relatively sharper rise in inbound goods.
The private sector credit extension (PSCE) numbers for March will also be published this week. Nedbank expects PSCE to have slowed to about 3.1% year-on-year, down from 3.7% in February.
“Household credit remained particularly weak, lagging corporate credit,” said Khumbulani Kunene, an investment analyst at FNB wealth & investments.
This week, Nedbank forecasts household loan growth to have ticked up to around 3%, supported by credit card and vehicle finance demand while home loans and personal loans remained weak.
“Bills and investments, which fell sharply in February, probably rebounded, driven by increased trading activity amid the volatility caused by the US tariff announcements and the worries about the future of the GNU. We believe that underlying loan demand remained relatively sluggish in March,” Nedbank said.
Corporate loan growth, however, likely slowed from 5.1% to 3.5%, reflecting fragile business confidence and limited fixed investment activity.
The crop estimates committee (CEC) will publish its third summer crop production forecast for the 2024-25 summer crops on Wednesday.
“While we are concerned about the quality of the crop because of the excessive rains, we think the crop forecast may be maintained at the healthy levels around 18-million tonnes for the overall 2024-25 summer grains and oilseeds or even be mildly revised up,” Agbiz agricultural economist Wandile Sihlobo told Business Day.
“Current price levels for white maize are approximately 20% lower than last year, and those for yellow maize roughly 4% lower than last year.”
The Absa PMI, expected on Friday, improved by four points in March, rising to 48.7.
Kunene noted that both business activity and sales orders increased to just over 48 points, as export sales improved despite weakening global trade co-operation and local logistical constraints.
The now confirmed cancellation of the VAT rate increase provides significant relief to customers and should support purchases going forward.
— Khumbulani Kunene, investment analyst at FNB wealth & investments
“Furthermore, purchasing prices eased, with a stronger rand sheltering import prices. Concerningly, manufacturers are becoming progressively less optimistic about the near-term outlook. Trade tensions and rising local political uncertainty, and the impact this will have on confidence in the reform agenda as well as the rand, will likely worsen outcomes in coming prints,” he said.
“That said, recent destocking by manufacturers could support some production growth if demand holds up better than currently feared.”
Finally, April new vehicle sales will provide another signal on consumer and business sentiment.
Nedbank expects annual vehicle sales growth to have slowed to around 5%, following strong growth of 13.3% in March.
“The upturn in new vehicle sales probably continued in April, albeit at a much slower pace, due to the loss of trading days caused by the heavy load of the public holidays,” Nedbank said.
Recent gains have largely been driven by rental fleet purchases rather than new private or commercial demand.
“Households remain cautious about purchasing big-ticket items despite easing financial conditions,” the bank said, adding that subdued fixed investment activity continues to undermine commercial vehicle sales.
“Though April’s sales may have been affected by the number of holidays, momentum is likely to have been sustained, further supported by pre-purchases ahead of customers anticipating a VAT increase from May 1 2025,” FNB’s Kunene said.
“Importantly, the now confirmed cancellation of the VAT rate increase provides significant relief to customers and should support purchases going forward.”
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