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The SA Daily 24 January 2020

Global trade on the mend

  • Encouragingly, the latest IMF World Economic Outlook reports tentative signs of global manufacturing and trade bottoming out. Global trade volumes growth is estimated at 1.0% y/y in 2019; it’s then forecast at 2.9% y/y in 2020 and 3.7% y/y in 2021. The recently signed US-China Phase One deal and the pending Phase Two negotiations are encouraging in this respect.
  • However, SA manufacturing remains in the doldrums due to weak domestic demand and disruptive electricity supply. The BER manufacturing PMI measured a 3-month moving average of just 47.3 index points in December 2019.
  • While SA faces unpredictable and insufficient electricity supply, the country’s production sectors cannot reap the benefits from a global trade recovery.
  • Developed markets manufacturing PMIs are due out today: the euro zone manufacturing PMI, below 50 index points since January 2019, is expected at 46.8 for January 2020, after 46.3 in December 2019. Germany’s manufacturing PMI was 43.7 index points in December 2019 and is expected at 44.5 points in January. The UK manufacturing PMI is expected at 48.8 for January, after 47.5 in December. The US manufacturing PMI was 52.4 points in December and likely stayed there in January 2020; it had touched a low of 50.3 in August last year.

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