20 Feb.
Absa: SA Morning Sheet.
This is a daily economic comment …
The sheets can be downloaded daily from Absa Economic Research
An extract fro today’s sheet is provided as an example:
After two relatively light weeks of domestic data and events, this week will prove critical for South Africa’s markets with the release of consumer and producer price inflation data, and the tabling of the country’s National Budget. We look for CPI to continue its upward trajectory in January, rising to 6.2% y/y from 6.1% in December. Underpinning our forecast is a further increase in food prices and quarterly price surveys in insurance and funeral costs. These should more than offset our projected m/m fall in the transport component owing to some respite at the fuel price pumps and still lacklustre growth in vehicle price inflation. We forecast PPI to have moderated slightly in January to 9.6% y/y (9.8% prior) given our observation of a lower PMI price index, lower global oil prices and a stronger currency in January.
Inflation aside, the core focus will no doubt be on the tabling of the National Budget in Parliament on Wednesday (14:00 SA time). As we highlighted in our 2012 Budget Preview – More risks in the outer years last week, we expect a slightly narrower main budget deficit of around 5.6% of GDP to be announced for the current FY11/12 fiscal year. This comes on the back of our tracking estimates for revenues expenditures which show that the former are running ahead of target while the latter are slightly behind. Further out however, the news is likely to be less encouraging as we expect a deterioration in the National Treasury’s macro forecasts to result in lower revenue projections. With the country’s counter-cyclical expenditure plans expected to press on, we therefore look for the FY12/13 and FY13/14 fiscal deficits to widen to 5.6% (2011 MTBPS: 5.5%) and 5.0% (2011 MTBPS: 4.8%) respectively.
On the policy front, we are not expecting any major surprises, but rather updates on certain policies and projects previously announced such as the jobs fund, National Health Insurance, industrial policy and the new dividends tax to replace the secondary tax on companies from 1 April.
Markets: Hopes that EU finance ministers will sign off on another tranche of financial assistance for debt-laden Greece later today, together with China’s central bank’s weekend decision to reduce the required reserve holdings for the banking sector has bolstered risk appetite. Commodity prices are also firmer and the dollar is softer across the board. The ZAR went into the weekend on the front foot and has maintained a firmer bias this morning, which has opened the door for a move back down to R7.65 if not R7.60 area ahead of this week’s budget speech. …
The sheets can be downloaded daily from Absa Economic Research
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