The economy for business in Q2 2021
Businesses should not miss opportunities in the current economic upswing driven by a reprieve from the severe restrictions of 2020 and policies that encourage consumption, but vigilance in monitoring new Covid restrictions must be maintained.
These are some of the insights contained in the Sakeliga-ETM report Economic Highlights for Business Strategy (May / June 2021) released today. The report, released on a quarterly basis, contains a range of insights on domestic and global economic conditions of interest to local business communities in South Africa.
The following chart, contained in the report, highlights a recovery from the extremely weak trading conditions of 2020.
“South Africa is currently experiencing an economic recovery from the severe restrictions seen in 2020. The strong rand, commodity upswing, and global demand is benefitting some sectors, and businesses should not be overly cautious to exploit near-term opportunities”, explains Russell Lamberti, head of ETM Macro advisors.
“The current round of rand strength”, Lamberti continues, “provides importers the opportunity to secure good prices for crucial imports, while more export dependent industries are benefitting from buoyant global demand.”
“We are, however, cautious on longer term business strategy for South Africa. The cyclical reprieve, unfortunately, comes against a very weak structural economic backdrop with risks of further Covid restrictions. Mounting policy risks, pernicious ANC interventionism and failing state capacity pose significant risks to business operations. This should be considered in long-term corporate planning, investment and capitalisation, especially in industries with lengthy project timelines and physical assets with expropriation risk,” Lamberti urged.
The report also calls apon businesses to remain vigilant on emerging inflation risks. Future rand weakness would expose local businesses and consumers to significant price increases, which could harm recovery.
The report further covers the following topics:
- Recommendations for corporate strategy in Q2 2021.
- Barometers on business on trading conditions, inflation, fiscal stress, the labour market, and the rand.
- A section on South African macro economy
- A section on the global economy
- The Sakeliga-ETM South African Presidential Policy Scorecard.
Read the report at this link.