The world economy is on course for its best performance since 2010, with near-synchronised growth among advanced nations. The US will be an epicentre of the growth impulse, Europe will sustain its recent momentum and Japan is stronger than initially thought. Moreover, emerging markets will provide thrust to the world, as Russia and Brazil exit recession, and China finesses its growth profile around 7%.
Africa will also enjoy a revival in 2017, aided by resource-dependent economies harnessing relatively buoyant oil and base-metals prices. Resources-light East Africa will be sparkling, expanding by 5.5%, and South Africa’s 2016 nadir will be cemented by acceleration this year, although the likely inelegant and clamorous race to succeed President Zuma will seem all-consuming.
There are, of course, global and local risks: illiberal political pressures, and actions, will bear worryingly on both flanks of the Atlantic, and there is risk that President Trump’s fiscal stimulus proves impotent while China is unable to stave off financial sector instability. Across Africa, the weather is a crucial swing element for farmers, and economies. Following too little rain in the continent’s south, and too much in the east, last year, we wish for Goldilocks proportions in 2017. In South Africa, a growth revival will take root, albeit mostly inspired by exports.
Chief Economist, Standard Bank
2017 looks to be a year in which growth risks are skewed to the high side, not the low side. But, a better global growth outlook comes with heightened political risk. This comes not only from the ramifications of last year’s shocks, such as Trump’s election victory in the US and the Brexit decision in the UK, but also from a spate of elections in the euro zone. If nothing else, it looks set to be a year of volatility in financial markets.
It is reasonable to believe that growth in Sub-Saharan Africa is closer to finding the bottom. The performance of countries that have prioritised investment spending, mostly relying on external financing, will continue to outperform those of commodity producing countries that typically rely on domestic savings to finance investment spending.
From an SA political perspective, 2016 was a bruising year. The year’s extraordinary volatility was largely determined by the seismic changes brought about by a dominant ruling party losing its once casually assumed hegemony on the popular vote; a president scrambling for re-ascendancy after an epochal political miscalculation, and in doing so fanning wider internal discord in the party he leads; and a body politic, best represented by a restive student population, growing increasingly frustrated by the
stubbornly torpid pace of economic growth and transformation. We expect that 2017 may be a relatively quiet year for SA economics in comparison with the uncertainty and volatility which will be provided by domestic politics, commodity prices, US monetary and trade policy, and global geo-politics. We think that these dynamics are likely to be the biggest drivers of SA asset prices as opposed to fundamental domestic macro factors such as growth and inflation, which we
think are largely known and priced. Our view is still that rand weakness will fade, based on the underlying fundamentals. We define rand weakness on approach of 14.00 – 14.50. As base case, we still expect the rand to move closer to 13.00 against the dollar. At this stage we pencil this level in closer to year-end but the currency may well move there sooner.
Alternatively, link to the individual chapters below:
- Global economy – Steve Barrow
- Sub-Saharan Africa – Phumelele Mbiyo
- SA Politics – Simon Freemantle
- SA Economy – Kim Silberman and Walter De Wet