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  • Writer's pictureDr Roelof Botha

On Balance - Economic Update December

Updated: Jul 4

The downside

Almost a month without load-shedding would never last, although the unwelcome return to electricity rationing in January has been limited. Another frustration being experienced by retailers and factories awaiting overseas shipments from Durban harbour is the lengthy delays in getting products to market. It remains abundantly clear that a long road lies ahead in the quest to fix the damage done to South Africa’s infrastructure during the disastrous decade of state capture under Mr Jacob Zuma. With a bit of luck, the new-found commitment by the government to encourage public/private partnerships and even privatization could eventually pave the way for progress in repairing the parlous state of the country’s roads, railway lines and harbours.

The upside

Lower inflation

Most homeowners and businesses would have been relieved at the resumption of a downward consumer price index (CPI) trend, which dropped to 5.5% in November (down from 5.9% in October). The CPI is edging closer to the mid-point of the Reserve Bank’s inflation target range, and lower interest rates may be just around the corner. Reasons to be optimistic over the chances of inflation continuing on a downward path include the welcome decline in the oil price and a more substantial rand exchange rate against the US dollar.

Absa PMI ticks up again.

On Balance - Economic Update December

The Absa Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research at Stellenbosch University, ended 2023 on a firmer footing, returning above the neutral 50 index point level. Business activity seems to have been buoyed by a combination of festive season shopping and several weeks without load-shedding. It is particularly encouraging that respondents to the PMI survey were notably more optimistic about business conditions over the longer term, with this sub-index rising to its highest level in eleven months.

Rand outperforms its peers.

During December, most emerging market currencies took revenge on the US dollar, with South Africa’s currency outperforming all its peers, notching up a gain of 3%. The rand also fared better than the Euro and the British pound.

The rand also fared better than the Euro and the British pound. The dollar’s demise in December came as no surprise, with the 10-year US Treasury note yield pointing downward. This benchmark interest rate shed 100 basis points in December, indicating lower global investor appetite for safe-haven assets, such as the US dollar.

Trade surplus guaranteed

Earlier fears over South Africa’s trade balance slipping into deficit have dissipated. Thanks to a month-on-month increase of more than 9% in exports and a drop in imports, the cumulative trade surplus for the year up to November now stands at more than R50 billion. The chances of maintaining solid export growth in 2024 have improved considerably, with the prices of coal, iron ore and platinum increasing by 124%, 74% and 60%, respectively, from their pre-Covid levels (in March 2020). Platinum, a significant export earner for South Africa, briefly touched the $1,000 level at the end of December and is 9% stronger than in early 2023. With the two most populous countries in the world, India and China, destined to expand spending on infrastructure, prices for metals and minerals are bound to continue rising.


Dr Roelof Botha

On Balance by Dr Roelof Botha deliberately emphasizes positive news that, more often than not, confirms the resilience of the South African economy and the immense scope for new business opportunities.



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