Rand Report : Mid-term budget speech

After only a few weeks as South Africa’s Finance Minister, Tito Mboweni will be delivering his first Mid-Term Budget Speech (MBTS) on Wednesday the 24th of October. The Rand, Investors, South Africans and ratings agencies are poised anxiously awaiting the outcomes. In this report we look at key areas of the budget to be addressed as well as how the USD/ZAR currency pair is lining up for traders ahead of the meeting.

Growth outlook deteriorating

A second consecutive quarter of economic contraction see’s South Africa in a technical recession, with global risk factors such as the US / China trade war posing further threats to the health of world markets. In turn the Finance Minister will need to revise his forecasts lower for domestic economic growth. Consensus estimates suggest that the Gross Domestic Product (GDP) growth for 2018/19 will be revised to around 0.6% from 1.5% previously expected.

Expenditure ceiling and Stimulus

In late September, President Cyril Ramaphosa announced a new stimulus plan to help revive the South African economy. The plan requires a R50bn reprioritization of expenditure, the details of which Mr Ramaphosa said will be made available at the budget speech (MTBS). A reprioritization of

Article source: https://www.dailyfx.com/forex/technical/article/special_report/2018/10/23/rand-report.html