Panorama Secondary School-1.pptx

Panorama Secondary School MPC Statement Mandate of SARB The SARB has been able to maintain its inflation rate within its target range of 3-6% with inflation currently at 5.1% By stimulating investments and consumer spending, the SARB is determined to stabilize inflation toward i...

Panorama Secondary School MPC Statement Mandate of SARB The SARB has been able to maintain its inflation rate within its target range of 3-6% with inflation currently at 5.1% By stimulating investments and consumer spending, the SARB is determined to stabilize inflation toward it’s midpoint of 4.5%. While at the core promoting economic growth and maintaining price stability. Promoting price stability will help protect purchasing power and living standards of all economic participants. Global outlook The shipping traffic in the Suez and Panama Canals place a high risk on global trade. Global trade is at risk due to supply chain constraints and geopolitical tensions. This may lead to an increase in energy prices and supply chain instability. Real GDP GDP contracted by 0.2% in Q3 of 2023 and grew by 0.1% in Q4 This was due to domestic constraints and an underperformance in the primary sector. Projected GDP growth in 2024 was driven by improved energy supply as well as improvements in the Transnet rail and port crisis. Unemployment The unemployment rate increased from 32.1% in 2023 to 32.9% in Q1 of 2024. With agriculture and the mining sector being large contributors to this factor. Mining and Agriculture sector The mining sector declined by 7.1% in 2022 due to power outages, high costs and supply constraints. It expanded in Q4 of 2023 driven by increased production of PGM’s metal, coal, chromium ore and diamonds The agricultural sector declined by 9.7% in Q4 of 2023 due to loadshedding, high fuel costs, logistic constraints and animal diseases. Manufacturing and production The manufacturing and production surpassed expectations with a 1.9% increase in November 2023 and 2.6% in January 2024. Inflation outlook CPI In the first half of 2024 CPI fluctuated at the upper half of the inflation target range averaging at 5.3%. The increase was mainly driven by an acceleration in service, food and fuel price inflation. The increases in these indicators are influenced by the volatility of the rand as well as increases in global prices. Fuel price inflation Despite the Geopolitical tensions in the Middle East, fuel prices are expected to further decrease Due to the appreciation of the rand and lower international oil prices  Retail sales There was a further decline in retail sales due to reduced sales in consumer goods Food prices Food inflation fell from 5.1% in March 2024 to 4.7% in April making a significant decline from it’s peak of 14% in March 2023. Essential items such as bread, eggs and grains now cost slightly less than in recent periods Electricity price inflation Electricity prices are expected to increase above the inflation target rate Exchange rate The rand is amongst the least performing currencies among developing economies. It remains sensitive to global and domestic changes although it is slightly appreciating against the US dollar, it remains volatile. The decision The MPC decided to decrease the repurchase rate by 25 basis points Reduced levels of loadshedding and a strengthening rand against the US dollar will increase economic growth. Decreasing petrol prices can drive inflation to its midpoint. Lower interest rates can attract domestic and foreign investment which will stimulate economic growth. A decrease in the repo rate will promote consumer spending and stimulate aggregate demand