South Africa’s general elections have come and gone, and we now await the results that continue to trickle. From the incoming tally of votes, it appears as if the ruling ANC will win the elections and therefore it’s Presidential candidate Mr Cyril Ramaphosa will have the mandate to establish the sixth administration since the advent of democracy in 1994. What is not yet known is the margin of the victory, which matters for the next contest – policy choices. ...

Globally, central banks are under attack, supposedly for having too narrow mandates that focuses on price stability (low inflation) or for failing to boost economic growth when economies are not growing. I find this renewed impetuous to push for wider mandates for central banks in the run up to national elections very suspicious, opportunist and at times shows evidence of lack of creativity in how to kick-start economic growth. ...

There is a disconnect between what equity and bond markets performance are telling us about the outlook of the global economy, and therefore the performance of different asset classes that matter for investors. This disconnect has the fingerprints of the US Federal Reserve and the European Central Bank’s dovish policy stance. ...

In 1994, Moody’s was the only credit rating agency to initiate South Africa’s foreign currency credit rating with an investment grade rating of Baa3, which is an equivalent to a BBB- on S&P and Fitch rating scales, whose initial ratings were BB and BB+ - one and two levels below investment grade respectively. Over the past quarter century, the country’s credit rating improved to a best of A3 by Moody’s in 2009 and BBB+ by S&P and Fitch in 2005. ...

Markets are now bullish compared to December 2018, largely driven by the US Fed and the European Central Bank that have gone dovish, just like the People’s Bank of China and the Bank of Japan in terms of the monetary policy guidance given the apparent economic growth slowdown. This bullishness was further reinforce when the US extended the 1 March 2019 deadline to hike trade tariffs on Chinese products indefinitely, as analysts viewed this as a reduction in the risk of further escalation in trade tensions between the two biggest economies. ...

Following Minister Tito Mboweni’s maiden budget speech, economists and analysts are split on whether South Africa will once again avoid a credit rating downgrade to sub investment grade by Moody’s when it issues its rating review on the 29th of March. Those that believe that Moody’s will downgrade the country’s remaining investment grade rating cite the deterioration in the fiscal position. I believe Moody’s will neither change the stable outlook nor downgrade the credit rating on the 9th of March. ...

Following President Ramaphosa’s pronouncement of the New Dawn when he ascended to the Union Buildings early this year, economic growth expectations went as high as 2.3% for 2018. This was reinforced by the commitment to deal with corruption and clean up the maladministration in state-owned companies (SOCs) – where we saw changes in boards and management shakeups at no less than five of them, the setup of the Youth Employment Service (YES), the announcement of the investment summit and job summit to take place before the end of 2018....

There is evidence to show that minimum wages of R20 per hour or R3500 per month that became law on 1 January 2019 is too high relative to other emerging markets. The forecast by the esteemed Harvard Economist Professor Haussmann is that this will lead to job losses. To paraphrase him, it doesn’t make sense that a country with the highest youth unemployment and low skills workforce implements one of the highest national minimum wages (NMW) even when compared with OECD countries. This view was not refuted at the Economic Colloquium that took place in December and January, but understandably, the sheep has said politically for this to be reversed.   ...

South Africa’s economic strategy suffers from short-termism, wherein the immediate pressing social issues derail the path to the achievement of the long-term goal.  The result is that we have had at least five economic plans since 1994 - the Reconstruction and Development Programme (RDP), the Growth, Employment and Redistribution (GEAR), the Accelerated and Shared Growth Initiative for South, the New Growth Path (NGP) and the National Development Plan (NDP). ...