The SA Daily
24 April 2018
SA's leading index inching up
- A leading economic indicator (LEI) detects the turning points in a business cycle. SA’s LEI for February is due out today. There was an uptick in January, to 106.1 pts, the highest point since Q1:12, from 105.8 pts in December. We see the index inching up over the next few months due to several tailwinds fanning economic sentiment.
- First, there has been a dramatic improvement in SA politics, coupled with positive policy signals since late December 2017. The most recent was President Cyril Ramaphosa’s aim of private investment of $100bn.
- Second, global growth remains robust, as confirmed by the recent global growth forecasts by the IMF which reflect global growth at 3.9% in 2018 and 2019. Given that SA is an open economy, a healthy global trend would feed through to SA – albeit with a lag.
- Third, the recent 25 bps rate cut by the SARB and the benign inflation outlook will support rising real disposable consumer income.
- Further, the Moody’s decision to maintain SA’s investment grade rating with a stable outlook will also support sentiment.
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