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Figure 1: Baltic Dry Index and Cotlook A Index, January 2016 to June 2019.

producers and processors will largely depend Unemployment for the first quarter of 2019
on the changes in the value of the rand. is at 27,1%; close to the highest level in 15
The IMF stresses that there are major downside years. Both business and consumer confidence
risks to their growth predictions. Further trade is at lower levels; weaker retail sales and the
wars can hurt global economies and growth in decrease in share values on the JSE contributed
the euro area and China. The risks associated to weaker business confidence. Consumer
with Brexit remain high. If market sentiments confidence did improve slightly in the aftermath
deteriorate, it can result in tighter financial of the election. However, as unemployment
conditions. This will hurt countries with large remains high, wage increases remain at
public and private sector debt like South Africa. or below inflation and administered prices
In March 2019, the US interest rates on short- continue to increase at high levels, while retail
term credit exceeded the rate on long-term sales growth remains slow. Base effects will
securities. Economists regard this as a clear ensure that Stats SA reports positive economic
red flag pointing towards a recession. A recent growth in the second quarter of 2019, thus
survey among US business leaders also shows preventing us from going into a technical
that they fear the impact of Trump’s protectionist recession. However, chances of regaining
trade policies towards China, but also towards meaningful economic growth in the rest of
other countries like Mexico and India. 2019 are slim.
The rand has ended its positive trend and
SOUTH AFRICAN ECONOMIC has weakened since February 2018. Since
OUTLOOK September 2018 “Ramaphoria” resulted in some
South Africa was shocked by the recent release of recovery, however since then the downward
an annualised quarter-to-quarter negative growth trend has accelerated. Contradictory statements
rate of -3,2% for the first quarter of 2019. If one about the future of the South African Reserve
compares the first quarter of 2019 with the first Bank accelerated the weakening of the rand.
quarter of 2018, there was no real growth (0%). At its May 2019 meeting the Reserve Bank’s
Stats SA reported negative quarter-to-quarter monetary policy committee decided to leave
growth for nearly all sectors with only marginal the repo rate at its current level. However, the
growth in the financial services and government current and expected future level of inflation,
services sectors. A stagnant economy and combined with slow economic growth, will
growing population implies that consumers are probably result in a slight decrease in interest
getting poorer. rates later this year.

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