Risk Alert

Risk Alert | Which way will the Rand go?

Risk Alert | Which way will the Rand go?

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo give their view on the Rand and whether there is an upside risk in the currency strengthening.
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What is going on with Covid-19 in Europe and America and what does this mean for the global economy?

As a new era begins in America, how will markets and business react to the new balance of power?

Risk Alert | How accurate are Treasury forecasts?

Risk Alert | How accurate are Treasury forecasts?

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo analyse the growth, debt and deficit projections presented by the Finance Minister at last week’s mini-budget.
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In the absence of structural reform, what are the risks associated with the government’s current fiscal trajectory?

Cronje and Mahlobo also look abroad to renewed Covid-19 risks in Europe as well as this week’s election in America.

Risk Alert | Who will win the race in America?

Risk Alert | Who will win the race in America?

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo draw on the CRA’s electoral tracker to determine who is most likely to win the US presidential election on 3 November.
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While Mr Biden still appears well ahead in the electoral college vote, several swing states could tip the balance in favour of Mr Trump.

On the domestic front, Cronje and Mahlobo look ahead to this week’s interim budget speech and present the CRA’s growth estimates for the medium term.

Risk Alert | Quackery in the Union Buildings

Risk Alert | Quackery in the Union Buildings

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo highlight how proponents of ‘Modern Monetary Theory’ appear to be influencing the economic policy agenda in the Union Buildings.
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A slightly reworked Expropriation Bill opens the door to expropriation without compensation across various asset classes, including (but not limited to) land.

The IMF has revised its global growth estimates upwards, while India forges ahead with long-awaited reforms.

Risk Alert | Real reform or simply good PR?

Risk Alert | Real reform or simply good PR?

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo discuss recent attempts by the ANC government to swing the narrative on corruption and policy reform.
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Is the power of trade unions in South Africa on the decline following last week's failed attempt at a national strike?

Will Joe Biden sustain his lead in the build-up to next month's US presidential election?

Risk Alert | The risk of unemployment

Risk Alert | The risk of unemployment

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo explore the complicated nature of South Africa’s official unemployment statistics.
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What is the risk of the growing unemployment problem to the ANC government and the country as a whole?

While some moves are being made to assuage public opinion on corruption in the ANC, Cronje and Mahlobo caution against being distracted by what they term ‘political rabbits.’

Risk Alert | SAA handling indicative of broader policy reform outlook

Risk Alert | SAA handling indicative of broader policy reform outlook

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo discuss the government’s retreat from its assurance that it would not provide bailout financing for SAA, suggesting that this is a useful measure of broader prospects for policy reform.
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Cronje and Mahlobo also warn that fears of second wave Covid-19 infections in Europe might rattle markets and policy makers.

Who will emerge victorious in the US Presidential race?

Risk Alert | SA compares poorly to global peers

Risk Alert | SA compares poorly to global peers

In this week’s client Risk Alert, Bheki Mahlobo and Frans Cronje compare South Africa’s 2020 growth and deficit projections to the forecasts of other emerging markets.
Risk Alert | 5 ways ANC cadres could avoid corruption charges

Risk Alert | 5 ways ANC cadres could avoid corruption charges

In this week’s client Risk Alert, Frans Cronje and Bheki Mahlobo argue that mainstream analysts may have misread the ANC’s supposedly tougher stance on corruption.
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Cronje and Mahlobo outline five ways in which ANC members implicated in corruption could avoid having to ‘step aside’ from their positions.

Although the global recovery continues, there are a variety of indicators that suggest the world is entering a more erratic recovery phase.

Risk Alert | Corruption an existential threat to the ANC

Risk Alert | Corruption an existential threat to the ANC

In this week’s client Risk Alert, Dr Frans Cronje and Bheki Mahlobo look at the ANC’s debilitating corruption dilemma.
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Will there be a more aggressive approach from President Ramaphosa in tackling corruption?

In lieu of prosecutions, can internal disciplinary processes succeed, given how widespread corruption is within the National Executive of the party?

These and other key questions are discussed against the backdrop of the ANC’s deep and persistent factional divisions.

Risk Alert | Terrorism in Africa: is SA under threat?

Risk Alert | Terrorism in Africa: is SA under threat?

24 August 2020 - In this week’s client Risk Alert, Dr Frans Cronje and Bheki Mahlobo discuss the growing threat of Salafi-jihadisim in Sub-Saharan Africa.
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Will South Africa's security be threatened by terrorism over the medium-term as a consequence?

Despite assurances of party leaders, the ANC remains committed to prescribed assets in South Africa, and we explore the ideological drivers behind this.

Risk Alert | Has SA really passed its Covid-19 peak?

Risk Alert | Has SA really passed its Covid-19 peak?

17 August 2020 - In this week’s client Risk Alert, Dr Frans Cronje and Bheki Mahlobo discuss a new trend in South Africa’s Covid-19 data: sharply decreasing testing numbers.
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As belated attempts are made to reopen the economy, has South Africa really passed its peak, as we have confidently argued over the last two weeks?

Also assessed is the track record of Kamala Harris, the Democratic Party nominee for Vice President of the United States.

Risk Alert | Will Tito Mboweni deliver another Budget speech?

Risk Alert | Will Tito Mboweni deliver another Budget speech?

10 August 2020 - In this week's Risk Alert, Dr Frans Cronje discusses rumours of the departure of South Africa’s finance minister, Tito Mboweni.
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Dr Cronje also reveals the underlying reasons for the recent turning of public opinion against the ANC government.

Finally, Dr Cronje contemplates the veracity of 'Second Wave' fears, and the implications for the nascent global economic recovery.

Risk Alert | Has SA reached its Covid-19 peak?

Risk Alert | Has SA reached its Covid-19 peak?

This week, Dr Frans Cronje argues that Covid-19 infections have already peaked in South Africa, which could herald rapid economic and social reopening into the spring.
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The shrinking tax base and growing public expenditure heightens the possibility of the country falling into a debt trap, he says.

Dr Cronje also assesses the validity of the ‘Second Wave’ thesis and the consequences for the global economy.

Risk Alert | Can IMF funding lead to policy reform?

Risk Alert | Can IMF funding lead to policy reform?

27 July 2020 − This week, Dr Frans Cronje discusses the policy and ideological significance of soon-to-be-announced IMF funding for South Africa in the midst of the country’s growing fiscal crisis and governance failures.
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On the international front, Dr Cronje assesses the purported ‘second wave’ of Covid-19 infections in the US and Europe, as well as the ongoing tit-for-tat posturing between the US and China.

Risk Alert | SA jobs bloodbath and four risks for the global economy

Risk Alert | SA jobs bloodbath and four risks for the global economy

20 July 2020 - This week, Dr Frans Cronje discusses the results of a recent survey which revealed that an estimated 3 million jobs may have been lost as a consequence of the lockdown.
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Government plans to introduce a basic income grant to offset the social and economic impact of the lockdown will put even more pressure on the already strained fiscus. Government may make a move on private pensions to finance the grant programme, he argues.

Although the global economy appears to be bouncing back after Covid-19, Dr Cronje highlights four risks which may derail this recovery.

Risk Alert | ANC policy papers show little sign of reform

Risk Alert | ANC policy papers show little sign of reform

13 July 2020 - This week, Dr Frans Cronje highlights three policy papers which entered the public domain last week from within the government and the ANC. Neither paper puts forward anything by way of substantive structural reform, he argues.
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With manufacturing and trade volumes increasing across the developed world, we see the likelihood of South Africa de-coupling from the post-Covid-19 global recovery continuing to grow.

Risk Alert | SA GDP contracts for third consecutive quarter… and counting

Risk Alert | SA GDP contracts for third consecutive quarter… and counting

6 July 2020 - This week, CRA analyst Bheki Mahlobo discusses South Africa’s chronically underperforming economy.
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As GDP declined by 2% in Q1 2020, South Africa’s recession continued for the third consecutive quarter under President Cyril Ramaphosa. Further contractions of over 30% are expected in Q2 as a consequence of the government-imposed Lockdown.

This comes amidst signs of a robust post-Covid-19 global recovery driven by gradual re-opening in the developed world.

Risk Alert | Next steps for SA: will fiscal pressure breed reform?

Risk Alert | Next steps for SA: will fiscal pressure breed reform?

29 June 2020 - This week, Dr Frans Cronje, argues that fears of a “second wave” of Covid-19 infections in America are misplaced, but that such fears might nevertheless rattle financial markets.
Risk Alert | Debt and deficits likely to balloon in Tito's Emergency Budget

Risk Alert | Debt and deficits likely to balloon in Tito's Emergency Budget

22 June 2020 - Dr Frans Cronje discusses this week’s emergency budget, which will likely reveal that economic growth will contract by at least -7% for 2020.
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Capacity shortfalls at Eskom and a limited appetite for structural reform will put a hard cap on economic growth prospects going forward, he says.

On the international front, Dr Cronje discusses recent clashes on the border between China and India, as well as simmering tensions between North and South Korea.

Risk Alert | Can SA take advantage of stronger global commodity prices?

Risk Alert | Can SA take advantage of stronger global commodity prices?

15 June 2020 - This week, CRA analyst, Bheki Mahlobo explores whether South Africa can take advantage of increased commodity prices as the world begins to emerge from the Covid-19 crisis.
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Mahlobo also discusses the prospects for reform in South Africa’s electoral system, as well as recent polling which suggests high demand for deregulation of the labour market.

Risk Alert (Week of 08 June 2020)

Risk Alert (Week of 08 June 2020)

This week, Dr Frans Cronje discusses the implications of a recent ANC policy document which seeks to empower the state to direct a greater share of economic activity and to finance such activity by tapping private savings.
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Internationally, Dr Cronje highlights how markets and employment numbers in the developed world are beginning to rebound despite enormous global geostrategic volatility.

Risk Alert (Week of 1 June 2020)

Risk Alert (Week of 1 June 2020)

This week, Dr Frans Cronje raises concerns about South Africa’s Covid-19 testing and tracing capabilities as the country enters level 3 of its Lockdown.
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On the international front, Dr Cronje notes that R remains below 1 for much of Europe, America, and Asia, signalling the early stages of a global recovery.

Beyond Covid-19, Dr Cronje highlights the restrictions on Hong Kong’s autonomy by Beijing, as well as growing Russian influence in Libya.

Risk Alert (Week of 25 May 2020)

Risk Alert (Week of 25 May 2020)

Following President Ramaphosa’s announcement last night, Dr Frans Cronje argues that support for the economic lockdown has largely collapsed within the government and that the move to level-3 will see a significant degree of economic reopening.
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CRA calculations reveal that South Africa’s R rate remains above 1, suggesting that the pandemic is still expanding exponentially more than 60 days after the country recorded its 100th case.

Risk Alert (Week of 18 May 2020)

Risk Alert (Week of 18 May 2020)

This week, Dr Frans Cronje, argues that South Africa’s purported move to Lockdown Level 3 remains vague, with no clear benchmarks attached to the various levels, and no plan in place to manage the transition.
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Globally, Dr Cronje observes that the continued posturing between the USA and China will be tempered by both nations’ interdependent trade relationship.

Expect a stuttering economic re-opening in Europe and the UK if Covid-19 reproductive rates remain below 1.

Risk Alert (Week of 11 May 2020)

Risk Alert (Week of 11 May 2020)

This week, Dr Frans Cronje considers tensions between the United States and China, and the prospects for both economies in a post-Covid-19 global recovery.
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Domestically, Dr Cronje highlights the recent statements made by President Ramaphosa in favour of “Radical Economic Transformation”  as well as the isolation of the Finance Minister within the cabinet.

Risk Alert (Week of 4 May 2020)

Risk Alert (Week of 4 May 2020)

This week, Bheki Mahlobo argues that the move from Stage 5 to Stage 4 lockdown represents a political response to public frustration at the lockdown, rather than a substantive change in policy.
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Mahlobo notes that the reform faction of the ANC remains a minority, with the securocrats and ideologues controlling the balance of power.

Internationally, Mahlobo highlights the risk of South Africa’s foreign policy stances undermining longer term access to western funding.

Risk Alert (Week of 27 April)

Risk Alert (Week of 27 April)

CRA Research Assistant, Bheki Mahlobo argues that this week’s expected move from phase 5 to phase 4 of the South African lockdown may do relatively little to restore much by way of domestic economic activity.
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Mahlobo notes that the weakness of South Africa’s stimulus position, combined with the flaws in the new lockdown model could see a major crisis in which public confidence in the government collapses just as the South African infection curve escalates and millions of people are forced to come to terms with deepening impoverishment.

Risk Alert (Week of 20 April)

Risk Alert (Week of 20 April)

This week, Dr Frans Cronje considers the proposal by the European Commission to reopen the economies of Europe, and contrasts this with the recent tightening of restrictions in Japan.
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On South Africa, Dr Cronje discusses the growing likelihood of increased stimulus spending and highlights the prospect of money-printing as a medium-term risk.

Dr Cronje also reflects on the risks attendant to a premature re-opening of South Africa’s schools, which, he argues, would undermine much of the effect of the lockdown to date.

Risk Alert (Week of 13 April 2020)

Risk Alert (Week of 13 April 2020)

This week, Dr Frans Cronje identifies the ideological and political contestation within the Tripartite Alliance as a major risk complicating South Africa’s response to the Covid-19 crisis and the recovery thereafter.
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Dr Cronje also provides projections of Covid-19 mortality estimates based on various case fatality rates (from 0.5% on the lower end to 2% on the top end). He argues that without much improved levels of testing, analysts and policy makers alike are effectively driving blind in their response to the pandemic.

Risk Alert (Week of 6 April 2020)

Risk Alert (Week of 6 April 2020)

This week, Dr Frans Cronje argues that despite the economic and market disruption, the worst case global scenarios for Covid-19 might be dissipating.
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While there may be relative upsides beginning to emerge internationally, Dr Cronje’s assessment of South Africa’s recovery prospects are more downbeat as isolation protocols falter and the economic impact of the lockdown begin to be felt.

Risk Alert (Week of 30 March)

Risk Alert (Week of 30 March)

In this week’s alert, Dr Frans Cronje warns that the SA response to the Covid-19 pandemic may not be as effective as in other countries, especially as poorer communities struggle to adhere to isolation protocols.
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Dr Cronje also looks beyond the current crisis to assess SA’s economic outlook post-Covid-19. Last week’s Moody’s downgrade will hinder recovery efforts, and will likely result in further ZAR weakening.

Risk Alert (Week of 23 March 2020)

Risk Alert (Week of 23 March 2020)

This week, Dr Frans Cronje assesses the SA government's capacity to respond to the rapidly unfolding Covid-19 crisis.
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Dr Cronje also discusses the volatility in international financial markets, the efficacy of stimulus measures, as well as prospects for the domestic and global economy in 2020.

Risk Alert (Week of 16 March 2020)

Risk Alert (Week of 16 March 2020)

After the tumultuous events of last week, Dr Frans Cronje unpacks the ongoing fallout from the COVID-19 crisis and the consequent shocks in global financial markets.
Risk Alert (Week of 9 March 2020)

Risk Alert (Week of 9 March 2020)

This week, Dr Frans Cronje discusses the US general elections, and the impact of the coronavirus outbreak on Chinese manufacturing output.
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On the domestic front, Dr Cronje assesses the Finance Minister's prospects of reducing the public sector wage bill. Dr Cronje also highlights the risk of prescribed assets and the growing pressure on the SARB to loosen interest rates.

For queries on these or other points, please contact Bheki Mahlobo, who assisted Dr Cronje with the production of this alert.

Risk Alert (Week of 2 March 2020)

Risk Alert (Week of 2 March 2020)

In his Risk Alert for the week of 2nd March, Dr Frans Cronje analyses three risks emerging out of last week’s Budget speech. Dr Cronje also assesses the uncertainty surrounding the global coronavirus outbreak, as well as the causes of the recent strengthening of the US dollar.
Risk Alert (Week of 24 Feb 2020)

Risk Alert (Week of 24 Feb 2020)

This week, CRA Director, Dr Frans Cronje discusses trends in the global economy and likely consequences for SA.
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International factors include a dramatic slowdown in GDP growth in Japan, and the latest forward guidance by the US Federal Reserve, which indicated that it remains opposed to further rate cuts.

Two international bodies also made pronouncements on SA last week: Moody’s cut SA’s growth outlook from 1.5% to 0.7%; and the IMF, whose chief economist visited the country, dismissed the likelihood of a bailout for SA.

On the domestic political front, Dr Cronje discusses the origins of the Employment Equity Amendment Bill of 2020 and its likely impact.

Risk Alert (Week of 17 Feb 2020)

Risk Alert (Week of 17 Feb 2020)

This week’s Risk Alert highlights the risks associated with the United States’ ongoing review of its trade relationship with South Africa.
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Dr Frans Cronje argues that last week’s State of the Nation Address (SONA) failed to put forward a coherent plan to deal with SA’s deep economic problems. 

Two such problems include SA’s stubbornly high unemployment and lower manufacturing production output, both of which are discussed here in some detail.

Risk Alert (Week of 10 Feb 2020)

Risk Alert (Week of 10 Feb 2020)

This week’s Risk Alert focuses on the ongoing electricity supply shortfall, and the resulting constraints on SA’s economic growth.
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The proposed break-up of Eskom into multiple parts has been welcomed by many commentators. However, this could precipitate a second wave of state capture.

The global Coronavirus outbreak presents a contagion risk for SA and is something to watch closely.

Risk Alert (Week of 3 Feb 2020)

Risk Alert (Week of 3 Feb 2020)

The CRA has launched a weekly Risk Alert service. In this first alert, CRA Director, Frans Cronje, discusses Mr Ramaphosa’s current vulnerability, the prospects for reform in the ANC and the significance of the recent bailout of SAA.