The FNB House Price Index growth averaged 0.8% y/y in December, marginally higher than the 0.7% in November (revised from 0.5%), and a low of 0.5% in October.
This year was tumultuous as uncertainty on both the political and economic front kept expectations fluid. From the onset, it was obvious that a busy voting calendar across the globe would raise political and fiscal risks, while maintaining market volatility. Our own forecasts at the start of the year were for the Monetary Policy Committee (MPC) to start cutting interest rates in July, post South Africa's (SA) national election, but these were shifted to November given the volatility in economic data and market reactions, and then we shifted our forecast forward to September.
Looking over fiscal policy documents between now and the 1990s would give the impression that South Africa (SA) has been stuck in a time loop with the same socioeconomic objectives, same drive for economic reform, and the same fiscal constraints. However, going into the early 2000s, there had been major achievements in formulating macroeconomic policy, formalising implementation frameworks, and setting processes of accountability.
In this year's Medium-Term Budget Policy Statement (MTBPS) Treasury once again referenced the public and private sector fixed investment chart (Figure 1), raising two key concerns. Firstly, fixed investment remains significantly below the 30% of GDP target set by the National Development Plan, and secondly, Treasury underscored the importance of robust public and private sector fixed investment as a foundation for inclusive and sustainable growth.
After troughing at 2.1% y/y in May 2020, due to a lockdown-driven fall in demand and statistical imputations, headline inflation accelerated to 5.2% y/y in May of 2021. CPI weights are typically updated at least every five years, in line with international standards. New weights will be introduced with the January 2022 data and the base year will change to December 2020.
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