The release of the recent domestic data was overshadowed by Thursday’s cabinet reshuffle. While the moves could precipitate shifts in our economic forecasts, there is simply too much uncertainty to warrant a change – this is a view by First National Bank (FNB).
Following the cabinet reshuffle, the bank expect politics to continue to dominate news headlines in the week ahead. Recent developments have culminated in heightened uncertainty. Indeed the rand has reacted negatively to these developments with potential to depreciate further.
The current level of the exchange rate does not necessitate a change in our macroeconomic outlook. Our view of no change in interest rates and the pending sovereign downgrade still stand.
FNB will, however, closely monitor developments in the days ahead. Changes in economic policy, as well as pronounced rand weakness, would also lead us to reconsider our macroeconomic outlook.
On the data front, this week we look forward to the release of the Absa manufacturing PMI. The index has been steadily increasing over the past three months, supported by increased demand and a stronger rand. We expect this trend to have been sustained in March.
Vehicle sales are expected to remain weak as consumers continue to contend with still high debt levels, bleak job prospects and slow growth in disposable income. Quarterly employment statistics should be consistent with the general weakness in the economy.
While the year ahead should bode slightly better for job prospects, 4Q16 statistics should mirror the slowdown in economic growth experienced late last year.
Trade data will be published later this afternoon, an improvement in exports and continued import compression should have resulted in a reduction of the trade deficit.
In Namibia, the economic growth stumbled to 0.2% for 2016. Zambia headline inflation continued to decelerate falling to 6.7% y/y in March and Ghana cut the policy rate by 200bps to 23.5%.
Globally, the UK triggered Article 50. US consumer confidence surged to 125.6 in March and 4Q16 GDP was upwardly revised from the previous estimate of 1.9% to 2.1%. China NBS manufacturing PMI rose to 51.8 in March.