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World

Are the boom times back? What the 'astonishing' US economic rebound means for SA

29 April 2021 6:54 PM
Tags:
SA Economy
Global economy
The Money Show
Inflation
Reserve bank
Bruce Whitfield
US Federal Reserve
US economy
Us fed
monetary policy
commodity prices
Isaah Mhlanga
COVID-19
US economic rebound

US GDP rose by 6.4% in the first quarter and the effects will be felt around the world says economist Isaah Mhlanga.

The US economy has grown robustly, some would say astonishingly, in 2021 - GDP rose 6.4% in the first quarter.

Are the boom times back?

And what does this faster-than-expected rebound in the US mean for South Africa?

Image: Gerd Altmann on Pixabay

Bruce Whitfield interviews Isaah Mhlanga, Chief Economist at Alexander Forbes.

The rebound is welcome says Mhlanga, but it has also added fuel to concerns about inflation expectations.

In terms of what it does for the South African and global economy, it is quite positive for export of commodities and commodity prices.

Isaah Mhlanga, Chief Economist - Alexander Forbes

In Q4 of last year and Q1 of this year, that was the reason why we over-collected in tax revenues... so we expect much of this year to be the same, which means better-than-expected growth because of the fiscal stimulus that is being implemented in that particular country.

Isaah Mhlanga, Chief Economist - Alexander Forbes

The US rebound also has implications for monetary policy in South Africa, as the Fed indicated it is holding rates unchanged.

Also one factor which was unexpected was to say they are going to look at actual inflation rather than forecasting inflation before they can change policy.

Isaah Mhlanga, Chief Economist - Alexander Forbes

This has consequences for the [SA] Reserve Bank.

Isaah Mhlanga, Chief Economist - Alexander Forbes

"Markets are behaving as if there's never been a health crisis that precipitated an economic crisis" comments Whitfield.

There are lots of reasons to fear inflation at the moment and that is, I think, really underpinned by what is happening in commodities.

Bruce Whitfield, The Money Show host

The World Bank released their commodity forecast last week and in their report they show that this year almost every other commodity is up except for gold. In 2022 every other commodity is down except for platinum, so... this is a once-off increase in commodities, unlikely to be repeated.

Isaah Mhlanga, Chief Economist - Alexander Forbes

Listen to Mhlanga's analysis on The Money Show:


This article first appeared on CapeTalk : Are the boom times back? What the 'astonishing' US economic rebound means for SA




29 April 2021 6:54 PM
Tags:
SA Economy
Global economy
The Money Show
Inflation
Reserve bank
Bruce Whitfield
US Federal Reserve
US economy
Us fed
monetary policy
commodity prices
Isaah Mhlanga
COVID-19
US economic rebound

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