Latest news with #ElizeKruger
Zawya
29-05-2025
- Business
- Zawya
South Africa GDP growth outlook gets biggest cut since early 2023
Economists have cut their consensus forecast for South African economic growth this year by 0.3 percentage points in May, in the biggest single monthly downgrade since early 2023, a poll showed on Tuesday, as they factor in the impact of US tariffs. The last time growth forecasts got a similar trim was in early 2023 due to power shortages. A median forecast of 26 economists surveyed May 22-27 suggested growth would be 1.2% this year. Last month, the forecast was reduced to 1.5% from 1.7%. For next year, it was shaved by 0.2 percentage points compared with last month's poll to 1.6%. "I have sliced 0.5 percentage point off my earlier forecast for GDP growth of 1.5%," said independent economist Elize Kruger. "The bigger negative impact on South Africa will likely emerge from the indirect effect of the trade war on the global economy at large, and specifically on South Africa's major trading partners." Tariffs, rates, pressure US President Donald Trump proposed a 31% tariff on South Africa in early April, which as with other countries was put on pause for 90 days. While the direct impact of tariffs is likely limited to around 8% of total exports, some sectors will feel the impact more severely, particularly those that enjoyed duty-free access under the African Growth and Opportunity Act, added Kruger. The South African Reserve Bank, meanwhile, was expected to cut its benchmark repo rate by 25 basis points to 7.25% on Thursday as inflation is well below the midpoint of the central bank's target range. But there has been no major change to the rate outlook over the past month. The central bank is expected to hold rates at 7.25% until a 25 bps cut in November. Last month the second cut was expected early next year. Fifteen of 25 economists expect the repo rate to be eased by a quarter of a percent this week. Nine expect rates to be held steady at 7.50% while one expects rates to be cut 50 basis points. Inflation as measured by the change in the consumer price index is expected to average 3.5% this year, quickening to 4.2% next year and 4.4% in 2027, but still below the midpoint of the Bank's 3%-6% target. In March, the central bank kept its repo rate unchanged after three consecutive cuts, citing risks from Trump's global trade war and local budget disagreements. Inflation target unclear Still, inflation was recorded at 2.8% in April and the survey suggests it will average 2.9% this quarter. It is then expected to quicken close to the 4.5% midpoint of the target in coming quarters but still remain below that in two years. In Cape Town last week in parliament, National Treasury made only minor adjustments to its spending plans and deficit projections in a budget presented for a third time due to disagreements within the ruling coalition that derailed two previous versions. Michael Kafe, economist at Barclays, wrote the Sarb has room to cut 25bps given no CPI target change, contrary to indications by the deputy finance minister on 15 May that an announcement on the country's inflation target would be made very soon. "The 2025 Budget that was presented on 21 May did not even contain the words 'inflation target', leaving scope for the Sarb to ease policy further at the upcoming 29 May MPC meeting," added Kafe. Some economists still say this announcement is imminent. If it happens, that alone could lead to a downward revision of inflation expectations across all horizons, wrote Reza Ismail, head of bonds at Prescient Investment Management.
eNCA
28-05-2025
- Business
- eNCA
Over 50% of households benefit from grants
JOHANNESBURG - South Africa's average nominal take-home pay declined by 2% in April, month on month. This marks the second consecutive month of moderation. That's according to the latest BankservAfrica Take-Home Pay Index. Despite the monthly decline, take-home pay is still over 13% higher than a year ago. Independent Economist, Elize Kruger, says the escalating global trade war is dampening sentiments worldwide. Locally, it's impacting confidence and slowing economic activity.
eNCA
28-05-2025
- Business
- eNCA
Average take-home pay falls for second month
JOHANNESBURG - South Africa's average nominal take-home pay declined by 2% in April, month on month. This marks the second consecutive month of moderation. That's according to the latest BankservAfrica Take-Home Pay Index. Despite the monthly decline, take-home pay is still over 13% higher than a year ago. Independent Economist, Elize Kruger, says the escalating global trade war is dampening sentiments worldwide. Locally, it's impacting confidence and slowing economic activity.
The Citizen
28-05-2025
- Business
- The Citizen
Salaries decreased by 2% in April, but higher than a year ago
If you feel that your wallet was a bit emptier in April than the month before, you are not alone. Salaries did decrease in April. Salaries decreased by 2% in April compared to March, but are still higher than a year ago, as take-home pay slowed again. Mounting pressure on salaries also puts this week's interest rate decision in the spotlight, raising hope for relief among salary earners. According to the Bankservafrica Take-home Pay Index (btpi), the average nominal take-home pay recorded a second consecutive month of moderation in April. The Index reflects data from approximately 3.8 million salary earners. 'The nominal average take-home pay declined to R17 495 in April 2025, down 2.0% from R17 846 in March. 'Despite this deceleration, levels remain significantly higher than the R15 370 recorded a year ago,' Shergeran Naidoo, BankservAfrica's head of stakeholder engagements, says. He points out that the upward trend in take-home pay from the middle of last year marks a positive development after years of sluggish growth and salaries lagging behind inflation. However, he says, the escalating global trade war has dampened sentiment worldwide, affecting confidence in South Africa and slowing economic activity as investors and households pull back on their spending. ALSO READ: Here's what some of South Africa's SOE bosses earn Economic forecasts not great, affecting salaries too Elize Kruger, an independent economist, says although the worst-case scenario for the trade war impact seems to have been averted, economic growth forecasts were trimmed notably for the global economy, while local growth prospects are also expected to disappoint. 'This could hurt employment and earnings prospects of salary earners in South Africa in the coming months.' Real take-home pay, adjusted for inflation, also moderated by 2.2% to R15 005 in April 2025, compared to R15 344 in March, but is still notably higher than a year ago. 'The significant moderation in consumer inflation during 2024 had a positive effect on the buying power of salary earners and the scenario is continuing into 2025, with the latest headline inflation figure at only 2.8% for April 2025,' she says. With headline CPI now forecast to average to be around 3.4% in 2025 compared to 4.4% in 2024, it will be the lowest annual rate since the 3.3% recorded in 2020. The recent increase in the rand exchange rate, combined with a lower international oil price will result in further fuel price declines in June despite the increase in the fuel levy, while the sluggishness in the economy keeps demand-driven pricing pressures well contained. ALSO READ: Capitec CEO tops banking pay charts — but how do staff salaries compare? A look at how SA's top five banks pay 2025 expected to be a good year for salaries 'With this favourable inflation scenario, 2025 will likely be the second consecutive year of positive real take-home pay growth, supporting demand in the economy,' Kruger says. However, with the elevated cost of living, additional taxes announced in Budget 2025, with no adjustment to tax brackets and an inflation-related fuel levy increase, as well as continuing high interest rates, salary earners remain under pressure. Early indications are that the real gross domestic product (GDP) growth rate for the first quarter of the year will likely be zero, or even negative. With the current repo rate at 7.5%, the real repo rate stands at 4.1%, which is a very restrictive stance if the neutral real repo rate of 2.8% is considered, Kruger says. 'A decrease in the cost of credit could go a long way to offer relief to households and the business sector, boosting confidence levels somewhat, while also lowering the hurdle rate on capital expenditure programmes. 'While a more aggressive cut would have been welcomed, the South African Reserve Bank (Sarb) is likely to cut interest rates by only 25 basis points at best at its Monetary Policy Committee meeting on Thursday.' ALSO READ: Increase in take-home pay in January shows positive start to 2025 Slightly higher salaries not enough – we need repo rate cut With the economy stalling in the first quarter and global pressures mounting, accelerating structural reforms is now critical. Tackling energy, logistics and governance challenges will help to unlock growth and buffer against external shocks. 'The current low inflation environment, supported by lower international oil prices and the rand's notable recovery in recent weeks, provides an opportunity for monetary policy to play a role in offsetting some of the pain inflicted on the economy by recent global developments, as many developing and developed economies have already done,' Kruger says. 'While the debate about lowering the inflation target band is ongoing, it should not prolong the pain inflicted on the economy by exceptionally high interest rates.'
Reuters
27-05-2025
- Business
- Reuters
South Africa GDP growth outlook gets biggest cut since early 2023; SARB to trim rates: Reuters poll
JOHANNESBURG, May 27 (Reuters) - Economists have cut their consensus forecast for South African economic growth this year by 0.3 percentage points in May, in the biggest single monthly downgrade since early 2023, a Reuters poll showed on Tuesday, as they factor in the impact of U.S. tariffs. The last time growth forecasts got a similar trim was in early 2023 due to power shortages. A median forecast of 26 economists surveyed May 22-27 suggested growth would be 1.2% this year. Last month, the forecast was reduced to 1.5% from 1.7%. For next year, it was shaved by 0.2 percentage points compared with last month's poll to 1.6%. "I have sliced 0.5 percentage point off my earlier forecast for GDP growth of 1.5%," said independent economist Elize Kruger. "The bigger negative impact on South Africa will likely emerge from the indirect effect of the trade war on the global economy at large, and specifically on South Africa's major trading partners." U.S. President Donald Trump proposed a 31% tariff on South Africa in early April, which as with other countries was put on pause for 90 days. While the direct impact of tariffs is likely limited to around 8% of total exports, some sectors will feel the impact more severely, particularly those that enjoyed duty-free access under the African Growth and Opportunity Act, added Kruger. The South African Reserve Bank, meanwhile, was expected to cut its benchmark repo rate by 25 basis points to 7.25% on Thursday as inflation is well below the midpoint of the central bank's target range. But there has been no major change to the rate outlook over the past month. The central bank is expected to hold rates at 7.25% until a 25 bps cut in November. Last month the second cut was expected early next year. Fifteen of 25 economists expect the repo rate to be eased by a quarter of a percent this week. Nine expect rates to be held steady at 7.50% while one expects rates to be cut 50 basis points. Inflation as measured by the change in the consumer price index is expected to average 3.5% this year, quickening to 4.2% next year and 4.4% in 2027, but still below the midpoint of the Bank's 3%-6% target. In March, the central bank kept its repo rate unchanged after three consecutive cuts, citing risks from Trump's global trade war and local budget disagreements. Still, inflation was recorded at 2.8% in April and the survey suggests it will average 2.9% this quarter. It is then expected to quicken close to the 4.5% midpoint of the target in coming quarters but still remain below that in two years. In Cape Town last week in parliament, National Treasury made only minor adjustments to its spending plans and deficit projections in a budget presented for a third time due to disagreements within the ruling coalition that derailed two previous versions. Michael Kafe, economist at Barclays, wrote the SARB has room to cut 25bps given no CPI target change, contrary to indications by the deputy finance minister on May 15 that an announcement on the country's inflation target would be made very soon. "The 2025 Budget that was presented on May 21 did not even contain the words 'inflation target', leaving scope for the SARB to ease policy further at the upcoming 29 May MPC meeting," added Kafe. Some economists still say this announcement is imminent. If it happens, that alone could lead to a downward revision of inflation expectations across all horizons, wrote Reza Ismail, head of bonds at Prescient Investment Management. (Other stories from the May Reuters global economic poll)
