Royal Garden Hotel, London, Britain - September 25, 2017 Cyril Ramaphosa, Deputy President of South Africa during the press conference
JOHANNESBURG - The rand cheered Cyril Ramaphosa pulling ahead in the race for ANC presidency on Monday by strengthening more than 2% to R13.49/$ from R13.81/$.
Ramaphosa was in the lead on Monday with 1‚862 branch nominations‚ ahead of Nkosazana Dlamini-Zuma who is backed by 1‚309 branches.
The rand was holding on to these gains on Tuesday morning‚ trading at R13.49/$‚ and R18.18/£ at 6.45am.
The rand has strengthened more then 5% from the R14.16/$ it sank to on November 16 after S&P Global Ratings downgraded SA’s foreign-currency bonds to its second rung of junk.
Punters are showing faith that Ramaphosa can clean President Jacob Zuma’s Augean stables of corruption and incompetence.
Statistics SA releases its third-quarter GDP data at 11.30am‚ which will give an indication of the health of the economy.
The economists’ consensus is SA’s quarterly economic growth slowed to about 1.1% from 2.5% in the second quarter.
This would put SA on track for lacklustre annual growth of about 0.6% for 2017‚ marginally better than 2016’s 0.3% growth.
“GDP growth prospects are a key consideration for SA’s sovereign credit rating‚ given the implications for fiscal consolidation. In their recent ratings reviews‚ Moody’s‚ Fitch and S&P all highlighted that in the absence of a recovery in the trend growth rate the likelihood of credit rating downgrades increases‚” Investec Bank economist Kamilla Kaplan said in her weekly note e-mailed on Friday.
“SA’s growth performance diverges from the synchronised global upswing. The underperformance has partially been ascribed to the effects of persistently depressed consumer and business confidence linked to heightened perceived policy and political uncertainty. Depressed confidence has manifested in decreased private consumption and investment rates‚” Kaplan wrote.
The slowdown in the third quarter from the second quarter can be forecast from Stats SA’s various monthly sector reports.
“Specifically‚ the substantial decline in wholesale trade will have outweighed the lifts in the retail and motor trade sectors. The finance sector‚ which constitutes 20% of GDP‚ is forecast to have registered slightly slower growth in the third quarter versus the previous quarter on decreased activity in financial intermediation‚” Kaplan wrote.
“In the primary sector of the economy‚ the agriculture sector is expected to continue reflecting the ramp-up in activity as the sector recovers from the 2015-16 drought‚ particularly in the maize-producing regions of the country. Mining data for the third quarter also signals that the sector registered strong growth.”
Further data on SA’s economic health will be provided by Stats SA’s third-quarter electricity generation and consumption report‚ which is also scheduled to be released at 11.30am.
Power consumption tends to be a reliable indicator of economic output‚ and SA’s electricity usage has yet to recover to the level reached before the 2008 global economic crisis — a mercy since Eskom would be unable to meet the demand.