In the loop 31 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R17.41/$, after closing weaker yesterday (R17.38/$*).
EM currencies were mixed yesterday; the TWD (+0.8%), THB (+0.5%) and CNY (+0.5%) were the biggest gainers; the COP (-1.7%), ZAR (-1.1%) and RUB (-0.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

The IMF has lifted its global economic growth forecast to 2.9% for 2023, from 2.7% previously (October forecast) and from 3.4% in 2022.
This upward revision follows resilient US spending and China’s reopening boosting demand despite downside risks to growth.
The IMF noted however that higher interest rates and inflation as well as the Russia-Ukraine war would continue to weigh on global economic activity this year.
Still, the IMF expects growth to bottom in 2023 and then pick up in 2024, to 3.1%.
Advanced economies are set to expand by 1.2% in 2023 (up from a previous estimate of 1.1% but down from 2.7% in 2022).
US growth is expected at 1.4% in 2023 (from 1.0% previously) amid resilient domestic demand.
Emerging markets are expected to grow by 4.0% in 2023 (from a previous estimate of 3.6% in October and growth of 3.9% in 2022).
China’s GDP growth is pencilled in at 5.2% in 2023 (from 4.4% previously).
It was noted that China and India will account for about half of global economic growth in 2023.
Sub-Saharan Africa growth forecast was revised upwardly to 3.8% for 2023 and 4.1% for 2024.
The SA GDP growth forecast was lifted to 1.2% for 2023 and remains unchanged at 1.3% for 2024.

China’s manufacturing and services sectors in January expanded for the first time in four months as the reopening from “Covid Zero” continued.
The Lunar New Year holiday also boosted travel and spending.
The manufacturing PMI rose to 50.1 in January, from 47 in December, while the non-manufacturing PMI increased to 54.4 in January, from 41.6 in December.

Locally, the M3 and private sector credit extension (PSCE) releases are due out today; PSCE likely increased by 8.3% y/y in December, the same as in November.
The trade balance for December is due out tomorrow; the trade surplus is expected to have compressed to R5.3bn, from R8.0bn in November.
The SA government is considering declaring a national state of disaster due to power cuts; a state of disaster was last declared in March 2020 to manage the Covid pandemic.
President Cyril Ramaphosa commented yesterday that the government was considering an emergency energy plan to assist households and small businesses install solar power and energy-saving devices.
This follows rising electricity costs after Nersa granted Eskom an increase in tariffs.
President Ramaphosa noted that further information on the emergency plan will be available in the coming weeks.
Eskom continues with Stage 4 loadshedding this week amid several generating units having broken down and delays in the return to service of units.

Brent crude oil is currently at $84.85/bbl; ($84.90/bbl*).
Gold is at $1920/oz ($1924/oz*).
SA CDS 257bps*, Brazil 233bps* and Turkey 562bps*.
Yields: US 10yr at 3.53%*, German bund at 2.31%* and SA 10-year generic at 10.43%*, SA’s R186 at 8.14%*.

* Denotes yesterday’s close.

Key events and data:

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