Economic Outlook for 2017 – a View

In this 5.39 minute video Kevin Lings, Chief Economist at STANLIB presents their economic outlook for 2017.  Click here for the video.

The salient points are:

World growth is expected to improve to 3.5% up from 3.1%  (in line with the long term average).

Risks to world growth are political and weighted to the downside.   These relate to President Trump and policies he may introduce; Brexit; forthcoming elections in Europe; Chinese 5-year elective conference and the ANC elective conference.

On the whole US growth rate quite solid at 2 – 2.2% (below the long term average of 3 – 3.1%).

  • Consumer confidence and spending in the US is good and the consumer remains the backbone of the US economy.
  • The problem is on the production side where investment is lacking and production is lacklustre.
  • A positive would be if Trump initiates policies to drive growth harder with less regulation, tax cuts and infrastructure spending.
  • A negative would be if President Trump’s policies trigger trade wars.

In China the story is quite good.

  • The Chinese are re-balancing their economy in favour of consumption but in the short term they are re-stimulating the economy with industrial production. This has lifted commodity prices which should be good for emerging markets.  This trend is expected to continue throughout the year as the Chinese will not want growth to slow prior to their elective conference in October.

In SA things should improve somewhat.

  • Last year was very difficult with growth of between 0% and 0.3%.
  • This year growth may pick up to over 1% because of the improvement in the agricultural season and an increase in exports. Inflation is also moderating which means consumer income will improve in real terms.   Broad based industrial activity is up, one reason being a more consistent electricity supply.
  • Weighing against the above are high unemployment and a testing of the political environment, an example being the ANC elective conference at the end of the year.

Source:  Kevin Lings, Chief Economist at STANLIB