Daily Market Report – 23 Apr 2025
IMF Slashes Growth Forecasts, Global Risks Weigh on Outlook
Global: IMF Slashes Global and US Growth Forecasts
- Global GDP cut to 2.8% (from 3.3%) amid trade war escalation.
- US GDP growth risk rises, with recession probability raised to 40%.
- SA forecast downgraded to 1.0% in 2025, a reflection of global headwinds and domestic fiscal uncertainty.
IMF’s projections acknowledge uncertainty surrounding the full economic impact of tariffs. Its warning is clear: policy errors now could cement stagflation, especially if monetary policy becomes politically compromised.
SA: Economic Data Confirms Growth Malaise
- Leading Indicator: -0.2% m/m in Feb; still doesn’t factor in tariff or VAT hike impact.
- Western Cape High Court will rule on VAT legality on April 29 – potentially pivotal for the budget debate.
- SARB flags 0.7% GDP contraction in worst-case – highlighting extreme vulnerability to global dynamics.
FX Market Insight
ZAR Outlook
- Spot: 18.5800
- Range: 18.40 – 18.7375
- Bias: Appreciative but cautious
ZAR is finding support as Trump’s erratic economic policies weigh on USD strength, yet risks remain. A legal ruling on VAT, possible fiscal reform from the GNU, and CPI/PPI releases could shift ZAR sentiment fast.
Global FX Drivers
- USD Index: Back at 100 after Powell firing rumours were dismissed – but sentiment remains fragile.
- EUR/USD: Pullback from overbought levels; support seen at 1.1300.
- GBP/USD: Profit-taking near 1.3300; dip-buying remains a theme.
- USD/JPY: Rebounded above 143.00; downside risk persists if US rate expectations fall.
Fixed Income & Policy Watch
SA Bonds/Yield Curve
- Bonds are in wait-and-see mode – pricing little movement until GNU budget clarity.
- Spread of R209 to UST 10Y remains compressed below 680bp.
If CPI comes in benign and political compromise holds, bonds could rally modestly. But don’t expect a deep rate-cut cycle from SARB just yet.
Rates Market Snapshot (FRAs)
| FRA Tenor | Cuts Priced In |
|---|---|
| 3X6 | 20bp |
| 6X9 | 42bp |
| 9X12 | 47bp |
| 12X15 | 48bp |
The curve is stabilising, but more cuts may be priced in if the ZAR appreciates further and inflation data trends lower.
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