Vol. 5

Overall, the US and China are set to deepen their trade war— a resolution in the short term remains unlikely. South Africa looks set to bolster ties with China and, in turn, the Chinese are likely to develop significant leverage over South African domestic policy.

On South Africa’s political landscape, President Cyril Ramaphosa is seen as weak and unable to contain populism. Inside the ANC a serious lobby is being built to challenge Ramaphosa who has been significantly weakened by the recession.

In the policy landscape, the Competition Amendment Bill passed by the Cabinet gives government much subjective discretion in what may be seen as anti-competitive behaviour, opening the door to corruption and uncertainty. The EFF will continue to raise nationalisation of the Reserve Bank, seeking to hold the ANC to its own policy resolutions as it has done on EWC. Investor sentiment will take another knock.

On the economic pulse, forecasts for this year’s growth have been revised downward. We project a mere 0.5% growth overall by year end for 2018. Headline inflation is up from 4.8% in August 2017 to 4.9% in August 2018.

In the engine room, the Standard Bank PMI reflects the lowest point in 29 months. Watch unemployment in particular rising, abhorrently high by any EM standard. Eskom capacity remains weak.

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