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Standard Bank Group
The SA Daily 13 December 2018

FCI now at 2016 levels

  • Financial conditions as captured by the financial conditions index (FCI) are important as it serves as a leading indicator for near-term economic activity.
  • The SA Standard Bank financial conditions index (FCI) showed a further deterioration of financial conditions in October to -1.1 from -0.94 in September. This is the deepest decline this year and takes the FCI back to 2016 levels when real GDP growth averaged 0.6%.
  • Looking ahead, the FCI faces pressure from the 25 bps rate hike by the South African Reserve Bank (SARB) last month, rand volatility due to local policy uncertainty, tighter global liquidity, as well as the relatively weak SA equity market.
  • However, the FCI will likely find some support from softer global oil prices as well as the rand’s recent recovery – although the currency remains both vulnerable and undervalued (see our report FCI falls further of 03 December, by Thanda Sithole).

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