Page 4 - Reeftankers - Annexure B Sasfin

PART A

ECONOMIC AND MARKET OVERVIEW

1. Economic Overview as at 31 March 2018

1.1 South African Economic Overview

SARB/Treasury: The South African Reserve Bank cut its benchmark repo rate by 25 bps to
6.5 percent on 28 March 2018, in line with market expectations, mentioning lower inflation
expectations. The Committee added that the upside inflationary pressure from the increase in
the VAT rate will be offset by the stronger exchange rate.
Growth: The South African economy advanced an annualized 3.1 percent quarter on quarter
in the last three months of 2017, following an upwardly revised 2.3 percent rise in the
previous period and beating market expectations of 1.8 percent. It is the strongest growth
rate in six quarters, mainly due to a robust gain in agriculture, a rebound in internal trade
and a faster increase in manufacturing.

Unemployment: South Africa's unemployment rate decreased to 26.7 percent in the fourth
quarter of 2017 from 27.7 percent in the previous period. The number of unemployed fell by
330 thousand to 5.88 million.
Inflation: The consumer price index in South Africa increased 4 percent year-on-year in
February of 2018, easing from a 4.4 percent rise in January and below market expectations
of a 4.2 percent gain. It was the lowest inflation rate since March of 2015, as prices
continued to slow mostly for transport and food.

1.2 Global Economic Overview

International Economies – USA
Fed: The Federal Reserve, meeting for the first time under Chairman Jerome Powell, raised
the target range for the federal funds rate by a quarter percentage point to 1.5-1.75 percent
during its March 2018 meeting, in line with market expectations. The Fed officials also
projected a steeper path of hikes in 2019 and 2020 as the economic outlook is improving.
Growth: The US economy expanded an annualized 2.9 percent quarter on quarter in the last
three months of 2017, higher than the 2.5 percent in the second estimate and beating
market expectations of 2.7 percent. Personal consumption expenditures and private
inventory investment were revised upwards.
Unemployment: The US unemployment rate stood at a 17-year low of 4.1 percent for the
sixth consecutive month in March 2018, slightly above market expectations of 4 percent. The
number of unemployed decreased by 121 thousand to 6.59 million. The labor force
participation rate dropped to 62.9 percent from a five-month high of 63 percent in February.
Inflation: Consumer prices in the United States increased 2.4 percent year-on-year in March
of 2018, above 2.2 percent in February and matching market expectations. It is the highest
inflation rate in a year, mainly boosted by shelter and used car prices.

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Investment Report Q1 2018