In line with our and the market expectations the SARB's Monetary Policy Committee (MPC) made a unanimous decision to keep the repo rate unchanged at 6.75%. Retail sales exceeded expectations for November 2018, coming in at an 11-month high of 3.1% y/y. Botswana CPI eased by 0.3ppt to 3.5% y/y in December and Namibia CPI moderated to 5.1% y/y in December.
Manufacturing production growth slowed to 1.6% y/y in November 2018, from a 2.8% increase in October. New vehicle sales ended 2018 on a weak note, with overall domestic sales falling by 1.9% y/y in December to 39 984 units. In the US, the Fed raised interest rates at its December FOMC meeting. However, it lowered its expectations of further rate hikes for 2019 from three hikes to two.
Globally, we expect growth to remain above trend but continue to slow in 2019. Central banks in developed markets are on course to steadily tighten monetary policy. Tighter financial conditions will continue to place pressure on emerging market currencies and some central banks will be forced to hike interest rates.
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