Encouraging rise in Absa PMI as blackout fears ease

Some encouraging news for South Africa on Thursday - a rise in the Absa Purchasing Managers' Index (PMI) indicates an uptick for business conditions in the next six months.

This is largely thanks to the lack of load shedding seen during the month of April

Goolam Ballim, chief economist at Standard Bank, explains.

During the first quarter of this year business conditions generally and especially in the industrial sector, subsided, to a large degree because of South Africa's electricity woes.

Goolam Ballim, Chief economist - Standard Bank

However, in April we did see a rebound to the levels that prevailed at the end of 2018.

Goolam Ballim, Chief economist - Standard Bank

Ballim points out that it is a 50/50 situation.

About half of South Africa's manufacturing industry is experiencing mild evidence of growth. The other half is somewhat shrinking.

Goolam Ballim, Chief economist - Standard Bank

He says the election outcome will determine what happens in the second half of the year.

We need to get over next week, the elections and perhaps a market frenzy outcome that then engenders further confidence and a more palpable revival in the latter half of 2019 into next year as well.

Goolam Ballim, Chief economist - Standard Bank

Ballim says after former president Jacob Zuma's administration "sucked the life out of this economy", confidence is now growing that under President Cyril Ramaphosa there will be further political and institutional stabilisation.

Markets are really holding their breath for a Cyril Ramaphosa-led ANC victory which galvanises the reform- and the cleanup agenda.

Goolam Ballim, Chief economist - Standard Bank

For more from Ballim, take a listen:


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