Global growth is moderatng as the recovery in trade
and manufacturing actvity loses steam. Despite
ongoing negotatons, trade tensions among major
economies remain elevated. These tensions, combined
with concerns about sofening global growth prospects, have weighed on investor sentment and contributed to
declines in global equity prices. Borrowing costs for
emerging market and developing economies (EMDEs)
have increased, in part as major advanced-economy
central banks contnue to withdraw policy
accommodaton in varying degrees. A strengthening
U.S. dollar, heightened financial market volatlity, and
rising risk premiums have intensified capital outlow
and currency pressures in some large EMDEs, with
some vulnerable countries experiencing substantal
financial stress. Energy prices have fluctuated markedly,
mainly due to supply factors, with sharp falls toward
the end of 2018. Economic actvity in the Euro Area has
been somewhat weaker than previously expected,
owing to slowing net exports. EMDE growth edged
down to an estmated 4.2 percent in 2018 as a number
of countries with elevated current account deficits
experienced substantal financial market pressures and
appreciable slowdowns in actvity. In low-income
countries (LICs), growth is firming as infrastructure
investment contnues and easing drought conditons
support a rebound in agricultural output.
The recent correction in global financial markets has left developed market equities about 10% cheaper and emerging market equities 25% cheaper, removing a lot of the valuation froth that was evident.
Commenting in Novare Investments’ economic report for the third quarter of 2015, Francois van der Merwe, Head of Macro Research, said: “We expect global equities to be supported by continued accommodative monetary policies, soft inflation and a moderate global economic recovery.
From ELANA Trading: Macroeconomic and Market Outlook 2015 „Bulgaria: Back on ...ELANA Group
This research report offers a thorough view on the major macroeconomic trends in Bulgaria, looking also into all internal and external factors such as crisis in Russia and Ukraine, as well as Greece turmoil. The outlook includes a snapshot of the Bulgarian stock market and its movers & shakers as well as ELANA Trading analysts top picks.
Some analysts points:
- We are cautious for 2015, but looking for a GDP growth pick up in 2016.
- Factors to watch during in 2015 would be the first decisive moves for reforms of the new coalition government, Greece and the crisis in Ukraine.
- The recent capital market decline provides good buying opportunities in various sectors as banks and financial services, electrical equipment, pharmaceuticals, etc.
- Upcoming IT IPO to boost market vitality.
Global growth is moderatng as the recovery in trade
and manufacturing actvity loses steam. Despite
ongoing negotatons, trade tensions among major
economies remain elevated. These tensions, combined
with concerns about sofening global growth prospects, have weighed on investor sentment and contributed to
declines in global equity prices. Borrowing costs for
emerging market and developing economies (EMDEs)
have increased, in part as major advanced-economy
central banks contnue to withdraw policy
accommodaton in varying degrees. A strengthening
U.S. dollar, heightened financial market volatlity, and
rising risk premiums have intensified capital outlow
and currency pressures in some large EMDEs, with
some vulnerable countries experiencing substantal
financial stress. Energy prices have fluctuated markedly,
mainly due to supply factors, with sharp falls toward
the end of 2018. Economic actvity in the Euro Area has
been somewhat weaker than previously expected,
owing to slowing net exports. EMDE growth edged
down to an estmated 4.2 percent in 2018 as a number
of countries with elevated current account deficits
experienced substantal financial market pressures and
appreciable slowdowns in actvity. In low-income
countries (LICs), growth is firming as infrastructure
investment contnues and easing drought conditons
support a rebound in agricultural output.
The recent correction in global financial markets has left developed market equities about 10% cheaper and emerging market equities 25% cheaper, removing a lot of the valuation froth that was evident.
Commenting in Novare Investments’ economic report for the third quarter of 2015, Francois van der Merwe, Head of Macro Research, said: “We expect global equities to be supported by continued accommodative monetary policies, soft inflation and a moderate global economic recovery.
From ELANA Trading: Macroeconomic and Market Outlook 2015 „Bulgaria: Back on ...ELANA Group
This research report offers a thorough view on the major macroeconomic trends in Bulgaria, looking also into all internal and external factors such as crisis in Russia and Ukraine, as well as Greece turmoil. The outlook includes a snapshot of the Bulgarian stock market and its movers & shakers as well as ELANA Trading analysts top picks.
Some analysts points:
- We are cautious for 2015, but looking for a GDP growth pick up in 2016.
- Factors to watch during in 2015 would be the first decisive moves for reforms of the new coalition government, Greece and the crisis in Ukraine.
- The recent capital market decline provides good buying opportunities in various sectors as banks and financial services, electrical equipment, pharmaceuticals, etc.
- Upcoming IT IPO to boost market vitality.
Macroeconomic Developments Report. March 2021Latvijas Banka
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Standpoint: Global Reflation by Kevin Lings STANLIB
Fears of sustained deflation and stagnant growth in the United States and Europe have been replaced by a more optimistic growth outlook as well as concerns about rising inflation. This has driven developed market equities higher, but also weakened major bond markets.
Quantic Asset Management Monthly Review April 2019
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Monthly Newsletter on key sectors of Pakistan Economy with updates on Money Market and Pakistan Stock Exchange (PSX) and latest numbers of Inflation, Current and Fiscal Account.
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Our coverage of the Americas this month includes a new report on Costa Rica, where the legislature continues to block tax reforms proposed by President Luis Guillermo Solís, even as the country pushes ever-closer to a full-blown fiscal
PRS’ coverage of the Americas in May includes an update on Chile, where the center-left coalition government is encountering political headwinds. President Michelle Bachelet’s approval rating has plummeted amid a spate of corruption scandals, including a charge of influence-peddling against her son, and dissatisfaction among the electorate with the weak performance of the economy, which government critics have blamed on uncertainty created by the New Majority administration’s tax and labor reforms.
Since the previous meeting of the Monetary Policy Committee (MPC), several risks to the inflation outlook have begun to materialise. While headline inflation is comfortably within the inflation target band, indications are that we have passed the low point of the current cycle. Developments in the international environment have placed upward pressure on the inflation trajectory, while the domestic growth outlook remains challenging.
A Deep Dive into the Indian Union Budget 2022aakash malhotra
What does the Union Budget 2022 mean for the Indian economy? Explore all the major announcements made by the Indian Finance Minister surrounding economic indicators, direct taxes, existing policies, indirect taxes and major industries. A detailed analysis by Deloitte experts. Everything you need to know in one place.
Macroeconomic Developments Report. March 2021Latvijas Banka
Based on data from Latvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation.
Macroeconomic Developments Report. June 2018Latvijas Banka
Based on data from Latvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation. The publication is available only in electronic form.
Macroeconomic Developments Report. December 2019Latvijas Banka
The Macroeconomic Developments Report is published on a semi-annual basis. This publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation.
Standpoint: Global Reflation by Kevin Lings STANLIB
Fears of sustained deflation and stagnant growth in the United States and Europe have been replaced by a more optimistic growth outlook as well as concerns about rising inflation. This has driven developed market equities higher, but also weakened major bond markets.
Quantic Asset Management Monthly Review April 2019
Find out more about our services by visiting https://www.quantic-am.com/en/and https://www.tirthas.com/
Monthly Newsletter on key sectors of Pakistan Economy with updates on Money Market and Pakistan Stock Exchange (PSX) and latest numbers of Inflation, Current and Fiscal Account.
Macroeconomic Developments Report. June 2019Latvijas Banka
This publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation.
Bullard Fed US Macroeconomic Outlook 2017AtoZForex.com
St. Louis President and Chief Executive of the Federal Reserve Bank James Bullard addresses the Fed US Macroeconomic Outlook 2017 during an International Distinguished Lecture at the Australian Center for Financial Studies.
Our coverage of the Americas this month includes a new report on Costa Rica, where the legislature continues to block tax reforms proposed by President Luis Guillermo Solís, even as the country pushes ever-closer to a full-blown fiscal
PRS’ coverage of the Americas in May includes an update on Chile, where the center-left coalition government is encountering political headwinds. President Michelle Bachelet’s approval rating has plummeted amid a spate of corruption scandals, including a charge of influence-peddling against her son, and dissatisfaction among the electorate with the weak performance of the economy, which government critics have blamed on uncertainty created by the New Majority administration’s tax and labor reforms.
Since the previous meeting of the Monetary Policy Committee (MPC), several risks to the inflation outlook have begun to materialise. While headline inflation is comfortably within the inflation target band, indications are that we have passed the low point of the current cycle. Developments in the international environment have placed upward pressure on the inflation trajectory, while the domestic growth outlook remains challenging.
A Deep Dive into the Indian Union Budget 2022aakash malhotra
What does the Union Budget 2022 mean for the Indian economy? Explore all the major announcements made by the Indian Finance Minister surrounding economic indicators, direct taxes, existing policies, indirect taxes and major industries. A detailed analysis by Deloitte experts. Everything you need to know in one place.
Monetary policy is the policy adopted by the authority of a nation to control either the interest rate payable for very short term borrowings or the money supply, often as an attempt to reduce inflation or the interest rate, to ensure price stability and general trust of the value and stability of the nation's currency for every financial year based on the quarter, the new policy is made and executed for the growth of the economy. The RBI carries out the monetary policy through open market tasks, bank rate strategy, reserve system, credit control strategy, moral influence and through numerous different instruments.
Macroeconomic Developments Report. September 2020Latvijas Banka
The Macroeconomic Developments Report is published on a semi-annual basis.
Based on data from Latvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation.
With inflation spiking to the highest-ever levels, the Governor of the State Bank of Pakistan (SBP) Jameel Ahmad has announced to raise the interest rate to an all-time high level of 17%.
This report provides an in-depth analysis of the current economic landscape in major economies, such as the USA, UK, China, India, Japan, and key alliances such as G7, BRICS, and ASEAN. Additionally, it offers forecasts for the future economic outlook.
Fitch affirms south africa at 'bb+'; outlook stableSABC News
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Fed must relent. Our expectations now is for a state dependent (global financial conditions to stabilise, cushion rising debt repayment burden and allowing domestic leverage to level off, coupled with still moderate economic growth/inflation, policy options to widen positively globally, especially in China) Fed relent with scope for a final 25-50bps, if any (pause otherwise), in late 2019/2020, should the cycle extents, with the FFR hitting cycle terminal at 2.75-3.00%.
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Headline inflation is expected to escalate since Q4, but should remain anchored within the target range at 1.7% in 2023 and 2% in 2024—driven by higher energy and food prices. Meanwhile, the core inflation will likely stay elevated at 1.4% in 2023 and 1.5% in 2024. SCB EIC anticipates another policy rate hike in the September meeting to the terminal point of 2.5% since the Thai economy will continue to regain its potential. Inflation will encounter upside risks from higher energy and food prices. The real interest rate should therefore return to a positive trajectory, that will support Thailand’s economic and financial stability in the long term by preempting the buildup of financial imbalances during a prolonged period of low interest rates.
The global economic rebound will be increasingly unsynchronized. Based on our forecast, the global economic growth should ascend to 2.4% in 2023 and stand steady throughout 2024. The global economy has been outperforming the consensus. Yet, we observed a persistent fragility that could continue into 2024—as a result of rampant inflation, policy rate hikes among major economies, and depleting excess savings. Furthermore, China’s economy will face a slowdown over the short and long term as structural challenges could hamper the growth outlook.
Advanced economies' rate hike cycle will come to an end within this year. Rising commodity prices could drive global headline inflation around the year-end. Likewise, core inflation in major economies should stay elevated as tight labor markets continue to support labor income. Against such backdrops, the US Federal Reserve tended to keep its current policy rate at 5.25-5.5% until Q2/2024. The European Central Bank and the Bank of England will slightly raise policy rates in the rest of 2023 and maintain their restrictive rates for the time being. Monetary easing is expected in 2H/2024 after core inflation subsides. In Asia, the People’s Bank of China has stayed the course on monetary easing to bolster a flagging economy. In contrast, the Bank of Japan will likely scale
Union Budget 2023 by Nirmala Sitharaman brings new opportunities for the Indian economy with changes in direct tax and new policy updates with other industrial impacts. Read more at Deloitte India. Download PDF.
In 2020, inflation-adjusted GDP is projected to grow by 2.2 percent, largely because of continued strength in consumer spending and a rebound in business fixed investment. Output is projected to be higher than the economy’s maximum sustainable output this year to a greater degree than it has been in recent years, leading to higher inflation and interest rates after a period in which both were low, on average. Continued strength in the demand for labor keeps the unemployment rate low and drives employment and wages higher. If current laws governing federal taxes and spending generally remained in place, the economy would expand at an average annual rate of 1.7 percent over the next decade, roughly the same rate as its potential growth.
Similar to Statement of the Monetary Policy Committee 19 November 2020 (20)
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Statement of the Monetary Policy Committee 19 November 2020
1. MPC Statement 19 November 2020 Page 1
PRESS STATEMENT
EMBARGO DELIVERY
19 November 2020
STATEMENT OF THE MONETARY POLICY COMMITTEE
Issued by Lesetja Kanyago, Governor of the South African Reserve Bank
Since the September meeting of the Monetary Policy Committee (MPC), it has become
clear that Covid-19 infections will occur in waves of higher and lower intensity, caused
in large part by pandemic fatigue and lapses in safety protocols. The virus is spreading
rapidly in parts of North America and Europe and hotspots have emerged in some
parts of South Africa. While we have learned how to better manage the risks of
transmission and the design of lockdowns, these waves of infection will continue for
some time. Fresh spread of the virus and reimposed lockdowns will extend the time
needed for economies to get back to pre-pandemic activity levels. Despite the
welcome development in November of successful vaccine trials, global distribution of
vaccines is likely to be slow, resulting in a modest pace of global economic growth into
2021.
As expected, second quarter GDP outcomes for most economies were massively
negative. Third quarter recoveries have generally been robust and economies will
continue to recover in the fourth quarter. The International Monetary Fund (IMF) now
expects global gross domestic product (GDP) to contract by about 4.4% this year.
2. MPC Statement 19 November 2020 Page 2
Although global GDP forecasts improved from September, it is probable that global
growth will be revised somewhat in coming months.1
While financial asset prices have been volatile for much of the year due to pandemic-
related developments and geopolitical events, recent weeks have seen markets
strengthen. Capital flows to emerging markets have generally picked up when
compared to the outflows experienced in March and April, and global policy rates look
set to remain accommodative. Nonetheless, pronounced levels of risk aversion are
likely to persist through 2021, particularly where economies fail to grow or run large
external imbalances, fiscal deficits and high debt levels.
Locally, further easing of lockdown restrictions has supported economic growth, with
high frequency indicators continuing to show a pickup in economic activity during
August and September. The Bank’s forecast of third quarter GDP growth has been
revised up to 50.3% quarter on quarter, seasonally adjusted and annualised. The
growth rate for the full year is now expected to be -8.0%, compared to the contraction
of 8.2% expected at the time of the September. South Africa’s terms of trade remain
robust. Commodity export prices are high, while oil prices remain generally low.
Getting back to pre-pandemic output levels, however, will take time. Sharply lower
investment this year by both public and private sectors will weigh on growth prospects
in coming years. GDP is now expected to grow by 3.5% in 2021 and by 2.4% in 2022.2
Overall, risks to the growth outlook are assessed to be balanced, but this is tentative
and open to adjustment given the wide range of shocks hitting the economy,
1
Global growth in the QPM model is a trade-weighted average of South Africa’s trading partners. For 2020 this
is now at -3.9% (up from -4.2% in September) and revised down to 4.5% for 2021. Based on the October 2020
World Economic Outlook, the IMF expects global growth of 5.2% in 2021.
2
Compared to 3.9% and 2.6%, respectively, in September.
3. MPC Statement 19 November 2020 Page 3
uncertainties involving the effectiveness of policy, and the sensitivity of sentiment to
news flow. The somewhat stronger growth in 2020 and a small downward revision to
growth in 2021 implies little change in the size of the output gap over the forecast
period, compared to the September meeting.
The accommodative policies in many advanced economies and the improved
economic outlook have supported a partial recovery in global financial markets. But
this has so far resulted in only a trickle of fresh capital flows to emerging markets, and
financing conditions remain uncertain. South Africa’s high public financing needs have
been met instead by local private sector savings and borrowing from international
financial institutions. Yields have eased in recent months due to higher purchases of
sovereign bonds by resident investors, including banks, alongside SARB liquidity-
management operations. However, the yield curve remains exceptionally steep,
reflecting elevated levels of risk associated with high public borrowing needs.3
Better global economic and financial conditions saw the rand appreciate by 6.9% since
the September meeting. The rand has, however, depreciated by 8.7% against the
USD since January and remains below its estimated long-run equilibrium value. The
implied starting point for the rand forecast is R16.50 to the US dollar, compared with
R16.90 at the time of the previous meeting.
The Bank’s headline consumer price inflation forecast averages 3.2% in 2020 and is
slightly lower than previously forecast at 3.9% in 2021 and remains at 4.4% in 2022.
The forecast for core inflation is lower at 3.3% in 2020, at 3.4% in 2021, and remains
stable at 4.0% in 2022.
3
Measured by the EMBI+ premium over emerging market averages and as an absolute value over time.
4. MPC Statement 19 November 2020 Page 4
The overall risks to the inflation outlook appear to be to the downside in the near term
and balanced over the medium term. Global producer price inflation and oil prices
remain low.4 Local food price inflation is expected to remain contained. The
Committee additionally notes the significant but likely temporary reduction in medical
insurance price inflation for next year. Given low pass-through, risks to inflation from
currency depreciation are expected to stay muted. However, additional exchange rate
pressures could result from heightened fiscal risks. While there are no demand side
pressures evident, electricity and other administered prices remain a concern.
Importantly, expectations of future inflation continued to moderate this year and have
shifted slightly below the mid-point of the band for 2021. Market-based expectations
for short and medium-term inflation have eased slightly, while longer-term inflation
expectations remain higher.5
The Committee notes that the slow recovery will keep inflation below the midpoint of
the target range for this year and next. Unless risks outlined earlier materialise,
inflation is expected to be well contained over the medium-term, remaining below but
close to the midpoint in 2021 and 2022.
Against this backdrop, the MPC decided to keep rates unchanged at 3.5% per annum.
Two members of the committee preferred a 25 basis point cut and three preferred to
hold rates at the current level.
4
Our assumptions are now for oil prices to average about $40 per barrel in 2020, rising to $45 per barrel in
2021 and $50 per barrel in 2022.
5
The latest Bureau for Economic Research (BER) survey has expectations for 2020 down by 0.3 ppts to 3.6%
and to 4.2% (from 3.9 and 4.5%) for 2021. Five-year-ahead inflation expectations eased from 4.7% to 4.5%.
Household inflation expectations down from 6.2% to 5.9%. Market analysts (Reuters Econometer) expect
inflation to remain unchanged at 3.3% for 2020, lower at 3.9% in 2021 and unchanged at 4.4% in 2022.
Market-based rates are calculated from the break-even inflation rate, which is the yield differential between
conventional and inflation-linked bonds. These sit at 3.15% for the 5-year and 4.91% on the 10-year breakeven.
15-year breakeven inflation sits at 6.1%.
5. MPC Statement 19 November 2020 Page 5
The implied policy rate path of the Quarterly Projection Model (QPM) indicates no
further repo rate cuts in the near term, and two increases of 25 basis points in the third
and fourth quarters of 2021.
Monetary policy has eased financial conditions and improved the resilience of
households and firms to the economic implications of Covid-19 and continues to be
accommodative. The Bank has taken important steps to ensure adequate liquidity in
domestic markets. Regulatory capital relief has also been provided, sustaining lending
by financial institutions to households and firms.
Monetary policy however cannot on its own improve the potential growth rate of the
economy or reduce fiscal risks. These should be addressed by implementing prudent
macroeconomic policies and structural reforms that lower costs generally, and
increase investment opportunities, potential growth and job creation. Consistently
aligning administered prices and productivity-adjusted wage setting with projected
inflation would generate important macroeconomic gains. Such steps will enhance the
effectiveness of monetary policy and its transmission to the broader economy.
Economic and financial conditions are expected to remain volatile for the foreseeable
future. In this highly uncertain environment, policy decisions will continue to be data
dependent and sensitive to the balance of risks to the outlook. The MPC will seek to
look through temporary price shocks and focus on second round effects. As usual, the
repo rate projection from the QPM remains a broad policy guide, changing from
meeting to meeting in response to new data and risks.
Lesetja Kganyago
GOVERNOR
6. MPC Statement 19 November 2020 Page 6
The next statement of the Monetary Policy Committee will be released on 21 January
2021
Contact person:
Thoraya Pandy
0824168416
media@resbank.co.za