Prowess CEO and CIO Kelebogile Moloko reflects on Finance Minister Enoch Godongwana’s revised budget announcement and considers it’s broader potential significance for the nation…
Last week, S&P maintained SA’s credit rating, with a positive outlook despite rising unemployment. In the US, April CPI was softer at 2.3% y/y, but tariffs raised inflation concerns among Fed officials. Today, the focus shifts to President Ramaphosa’s meeting with President Trump, as he aims to ease SA-US tensions, and to Finance Minister Enoch Godongwana, as he tables a third version of the Budget in parliament.
Last week, the US central bank voted unanimously on Wednesday to keep the benchmark federal funds rate in a range of 4.25% to 4.5%, where it’s been since December. Locally, the launch of the second phase of Operation Vulindlela (OV 2.0) took center stage in a relatively quiet domestic data week.
US GDP undershot expectations last week, reflecting the first signs of ripple effects from President Trump’s tariff policy. Locally, Finance Minister Enoch Godongwana announced that the third tabling of the Budget would take place on Wednesday 21 May.
Last week, global markets remained sensitive to evolving U.S.-China tariff developments, with both nations exploring selective exemptions amid ongoing trade tensions. Locally, the decision to cancel the proposed VAT increase, combined with inflation dropping to a multi-year low, has raised expectations for potential interest rate relief as the Monetary Policy Committee (MPC) convenes this week.
Last week, President Donald Trump intensified his criticism of Jerome Powell, adding to investor jitters over the Fed’s independence and the chair’s position. Locally, SA Reserve Bank governor Lesetja Kganyago has warned against a knee-jerk reaction to newly imposed (and now paused) US tariffs, urging businesses to focus on improving competitiveness rather than resorting to protectionist measures.
Global financial markets continue to be affected by global trade shifts and by the escalating trade war between the US and China. Locally the rand has dropped sharply on the back of instability within the GNU.
Last week, markets declined in response to President Donald Trump’s announcement of higher-than-expected tariffs on all exports to the United States. This was swiftly followed by China’s announcement of retaliatory tariffs on U.S. imports, indicating a significant escalation in the ongoing trade dispute and raising concerns over the potential for a global recession. On the domestic front, the National Assembly narrowly approved the fiscal framework; however, uncertainty persists as legal proceedings have been initiated, citing procedural deficiencies in the approval process.
March saw improvements in US PMI data which helped boost overall business sentiment, while the US economy continues to show steady momentum. Locally, the GNU comes under threat over the budget, putting pressure on the local bond market.
Central banks acted cautiously last week, opting to keep policy rates on hold during a high degree of market uncertainty. Domestically, inflation remained unchanged and below the SARB’s midpoint target.
