2017q3

Regional eXplorer (ReX) Update, 3rd Quarter of 2017

 

Welcome.
We are pleased to announce another successful product update of the IHS Markit Regional eXplorer.

This update incorporates:

  • a number of major data source publications
  • quality checks to further improve the accuracy of the model
     

 

Regional Perspectives: Global Economy

 

The global economy: A synchronized expansion, led by the developed markets

For the first time since 2007, all the OECD countries are growing - and nearly three-quarters of them are seeing a pickup in growth this year.  Canada was the growth leader among the G7 in the second quarter, with an annualized 4.5% real GDP increase quarter on quarter (q/q), its fastest in six years.

At the same time, US second quarter growth was revised up from 2.6% to 3.0%.  Also, while April-to-June real GDP growth in Germany and Japan was an unexciting 2.5% (annualized) for each, the increase in domestic demand was much stronger (4.3% and 3.8%, respectively).  In both cases, appreciating currencies were a drag on growth.  In the emerging world, China's growth is holding up, while the hardest-hit economies are digging themselves out slowly.

Rising commodity prices and the rebound in world trade will help these economies in the next few years.

After six troubled years, the world economy finally seems to be enjoying a broad-based recovery.

 

 

Regional Perspectives: South African Forecast Highlights

 

The central bank surprised markets and cut its policy rate 25 basis points in June.  With headline inflation now within the central bank’s inflation target range of 3–6%, IHS Markit expects a 25-basis-point cut in the policy rate before end-2017.

IHS Markit is of the view that the 2017/18 budget deficit as percentage of GDP could widen to 4.0% (from the initial estimate of 3.4% of GDP) in the October medium-term budget policy statement, reflecting underperformance in government revenue.  This result could push government debt to GDP closer to the 50% threshold in 2018-19.  The risk of another local currency credit risk downgrade before end-2018 therefore remains high owing to fiscal slippage.

The looser monetary policy stance, rising real household income, and a net positive trade position (exports minus imports) are expected to leave South Africa's GDP growth rate at 0.9% in 2017.

 

 

Major data releases incorporated in this update

 

Living Conditions Survey (LCS) 2014/15

The LCS is a household-based survey that collects detailed income and expenditure data, as well as information on education, housing and living circumstance from households across South Africa.  The LCS data is used to monitor and profile the poverty levels in the country and also provides the necessary data to inform the development and maintenance of household and monitor inequality.  StatsSA have released the detailed expenditure data and it is incorporated in this update.

The latest LCS highlights some items that people today spend more money on compared to five years ago:  PayTV-type services like ShowMax and Netflix - as part of the recreation services category;  Telecommunication - cell phones, data bundles, Internet access, etc;  and overall education.  But since most people have limited budgets, as a result they are buying less (or paying less) for food, clothing and footwear and also petrol.

 

Demographic and Health Survey 2016

The South African Demographic and Heatlh Survey 2016 was published in May 2017, which contains a wealth of information on the demographic side.  The report that was published only contained a glimpse of the survey results.  A more comprehensive and detailed report is scheduled for release later in 2017, which will result in some potential refinements for the next release.  The DHS2016 confirmed that fertility is declining over the years, from 2.9 in 1998 to 2.6 in 2016.

 

Poverty Trends in South Africa 2017

The food, lower and upper poverty lines have also been updated according to the latest poverty trends report released by StatsSA.  Please note that we have adjusted the per person per month rand amounts from March/April prices to mid year estimates to better align with the rest of the demographic model.
 

 

ReX Publisher: taking our ReX data a step further

 

ReX Publisher generates automated research documents based on the latest ReX data available.  You can choose between a 3-page quick overview, or full content report complete with descriptive charts, data summaries and interpretations.

For more information, go to http://www.rexpublisher.co.za, or contact Johan.Boshoff@ihsmarkit.com

As always, we welcome your comments and feedback.  We hope you enjoy this update.

Best,
The IHS Markit ReX team