Summary of macro-economic research views:


  • Inflation: Disinflation as a trend remains intact, with headline inflation likely to approach the 4.5% midpoint of the SARB’s target range by mid-2024. In turn, this will offer the SARB some scope to consider cutting rates.
  • Repo Rate: The SARB kept the repo rate unchanged at 8.25% for a third consecutive meeting in November. The decision entrenched the view that South Africa’s rate-hike cycle has ended, barring any major inflationary shocks or sharp ZAR selloffs. Looking ahead, interest rates will likely decline by 75bps through 2024.
  • Government Finances: South Africa’s fiscus remains weak, with government finance statistics still trending weaker. This implies that foreign investors will need to be compensated for the higher level of risk associated with investing in the country.
  • GDP Growth: GDP growth has fallen back below 0%, with the economy struggling to grow amid headwinds such as high interest rates, load shedding, and structural constraints that will weigh on any future performance. There is also no obvious reason to expect that GDP growth will pick up meaningfully, especially since global growth is expected to slow down.
  • Currency: The ZAR continues to trade at a discount as investors prepare for the many risks and challenges that SA faces. The balance of probabilities still favours some ZAR strength on the back of a weaker USD, with a fair value on USDZAR still around R17.00.
  • Offshore Conditions: Global growth is expected to slow through H1 of this year. Although sometimes conflicting data sets show that the US economy is surprising in its resilience, the general trend continues to favour a weaker growth trajectory that will encourage the Fed and other central banks to cut interest rates.