Business news and Commentary COLIN proudfoot

2016-11-17 06:00

News

SOUTH African retailers Woolworths and Mr Price are reporting a significant decrease in sales as consumer discretionary spending comes under further pressure. The JSE general retailer index dropped 4.8% to its lowest level since April.

Woolworths clothing and general merchandise sales to date for the 2016/17 financial year are down 7.8% compared to the previous year.

Truworths reported a 21% decrease for the same period and Mr Price a 10.2% decrease.

Since the U.S. election results were announced, the rand has lost 5.1% against the U.S. dollar. This is the biggest weekly slump since August following concerns about the possible arrest of finance minister Pravin Gordhan.

A Donald Trump presidency is likely to negatively impact emerging markets if the president-elect follows through on protectionist policies that will impact U.S. imports. Last week, offshore investors sold off R5 billion of South African government bonds.

The department of statistics has again delayed the publishing of 2016 quarter three employment numbers. The latest delay, said to be due to outstanding confirmations of critical input data, should see the report being released on 22 November.

Commentary

Local and international happenings seem to be conspiring against an economic recovery in South Africa. To be sure, unless we get a break soon, it would appear that we could soon be facing a perfect economic storm.

The outcome of the U.S. election most likely means higher interest rates in the U.S., which will lead to international investors cashing out from emerging markets to take advantage of higher returns and lower risk in the US dollar. Huge outflows from South Africa will put even more pressure on the rand which has already taken a beating recently.

A weak rand impacts our national debt as well as our ability to service that debt. Ability to service and repay debt is critical when it comes to assessments by credit ratings agencies, the first of who are scheduled to evaluate our investment status next month. The positive impact of the fiscally disciplined mid-term budget will be totally erased if the currency continues to slide.

Another key factor looked at by the ratings agencies is the prospect for sustained economic growth. Retail sales is a prime indicator of the state of the economy but the horrible numbers being announced by that sector show a decrease in volume sales across the board. In all likelihood, the delayed job market report will also contain bad news as all indications are that major sectors continue to shed jobs.

It is hard to see how ratings agencies can ignore all the negatives. It was always going to be tough to maintain our current ratings and we certainly did our best to make it even tougher given all the political ructions we have been subjected to. Unfortunately, these recent happenings may just be the proverbial “last straw”.

- www.onewaybusinessservices. co.za

A Donald Trump presidency
is likely to negatively impact emerging markets if the
president-elect follows through on protectionist policies
that will impact U.S.
imports. Last week, offshore
investors sold off R5 billion
of South African government bonds

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.
NEXT ON NEWS24X

Inside News24

 
PARTNER CONTENT
INFOGRAPHIC: New thinking required for retirement

Everything we believe about retirement is fast becoming outdated.

/Sport

Book flights

Compare, Book, Fly

Traffic Alerts
Traffic
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.