As was expected by most analysts, South Africa's GDP shrank in the second quarter of this year at an annualized rate of 3% over the first quarter as compared to the 6.4% rate seen in the first three months of the year. This is one of the steepest contractions seen worldwide. Especially agriculture was a serious disappointment, with a 17% drop in Q1.
The unemployment now raised to a total of 29,7% (28,4% in 2009). Also worrying is that retail sales decreased in June by an annual 6,7% following by a drop of 4,4% in May. The mix of people being worried about job security, high levels of household debt and still high inflation is is a deadly one. What is wost worrying is the inflation which remains extremely high. 
The year-on-year CPI inflation rate was 8. 1 per cent in January 2009. It then rose to 8.6 per cent in February before declining marginally to 8.5 per cent in March Inflation in the first quarter of the year was driven mainly by increases in food prices, alcoholic beverages, household maintenance and repair, electricity, and in financial services. Since that time the inflation rate has fallen back slightly - from 8.0 per cent in May 2009 to 6.9 per cent in June - but given the extended recession and the low levels of capacity utilization this rate is still noteworthy for its size. Electricity prices in South Africa went up by 28,6%. Inflation of 6,9% is a headache for the SA Central Bank. The bank already lowered its repurchase to 7 percent. Governor Tito Mboweni said in a televised statement after the monetary policy meeting that the decision to reduce rates had been a “very closely debated one”, and it seems unlikely that further rate cuts will follow rapidly. The South Africa rand has climbed 21% this year against the dollar. This is mainly due to the inflow of so called carry traders from Europe and the US. But is this impressive performance of the ZAR supported by the underlying macro fundamentals?
Negative growth, depressed confidence and steadily rising unemployment certainly do not make it look like it is. “We are deeply concerned about a permanent decline in productive capacity as factories close rather than simply reduce output,” Patel said to the South African Parliament, "Manufacturing output has been declining since mid-last year. It has now reached levels last seen some five years ago.” All of which naturally enough feeds directly through to the pretty substantial current account deficit. 
The growing pressure on the fiscal side will be enormous. South Africa’s borrowing needs are likely to double the government’s projection according to estimates from JPMorgan Chase & Co. Government borrowing may surge to 183 billion rand (22,4 billion US$) in the 2009-10 fiscal year to cover spending, compared to the budgeted 90,37 billion budget. This would increase the budget deficit to 7,4% of GDP, compared to the forecasted 3,8%.
Read the full report here .
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Aug 29 2009
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Aug 9 2009
On June 2nd, Vinlanda Assesoria, Incorporações & Projetos launched Inga Imperial, apartementos em Niteroi .
The project exists of 2 coberturas and 16 128m2 luxury apartments with only 2 apartments per floor. The location is exquisite: in the calm Dr. Pereira Nunes street, just one block away from the beach.
Two months after pre-launch, the 2 coberturas are sold, as well as 8 from the 16 apartments. Only 8 apartments are up for grab.
The average price of an apartment of 128 m2 is 460.000 R$, or 3.600 R$ per m2.
If you are looking for an apartmento em Niteroi , call Patrimovel and make an appointment for a visit.
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May 31 2009
The Brazilian articles have moved to a new section which you can find here: Brazil economy updates .
Meanwhile in South Africa things are deteriorating.
This weekend The Times reported on recent water tests in Durban where more than half of the tests did not meet health standards .
“It shows this water is not protected and organisms are growing at a hell of a rate.”
Meanwhile a business man offered Zuma 1 billion Rand to buy satellite equipment, computers and helicopters for regular patrols - they would be available to police all over this country. The business man sees crime as the biggest threat to South Africa and right he is. But a "donation"? There's nothing like "Cash in the table"..or should I say, "There's never a thing called Free Lunch". What's the catch? Surely a man cannot just wake up and think about donating R1 billion to the state...the devil is in the details.
Readers wonder who'll be able to operate this tech material, the army already doesn't have people to operate or maintain new boats, U-boats and planes.
Also, let's not forget that last February Zuma and the ANC abolished the Scorpions , South Africa's elite corps who was investigating the ANC . -
May 16 2009
I'm sceptical on South Africa's short and mid-term future, that's no secret. The whole African continent is facing an enormous economical backlash . There will be a public deficit of 5,4% in 2009 compared to a surplus of 2,8% in 2009. The commercial balance is dropping from a surplus of 2,7% in 2008 to a deficit of 4,3% in 2009. Already today the South African public health system, on which 90% of the South Africans depend is falling apart .
But the real big issue of South Africa will be the influx of immigrants .
South Africa is unlike Brazil not a multicultural country. Different ethinic groups live next to each other and not with each other. When I address a black chief of staff of South African Airlines in Joburg and I stand on my rights without insulting the woman, she immediately threatens me not to be racist. The effect of "reverse racism" is absolutely stunning these days in the country.
And now there's an absolute blockbuster movie which will appear later this year which is taking place in South Africa and uses a metaphor to dig up the whole issue of racial seggregation, apartheid and intolerance in South Africa: District 9 .
Neil Blomkamp is the director. He is a South AFrican born, Vancouver based director. I got know him in 2005 through these shortmovies: " Alive in Johannesburg ".
For District 9 (which will be released on August 14th in South Africa and North America, later this year in Europe), Neil Blomkamp teamed up with Peter Jackson through and Jackson's production company, WingNut Films. Sony Pictures Entertainment picked up the North American distribution rights for District 9 which will mark Blomkamp's feature film directorial debut. Peter Jackson is the producer of the Lord of the Rings, Crossing the Line,... so expect District 9 to become a blockbuster.
The setting is South Africa and the metaphor both producers use in District 9 is as suble as a brick to the head: "Look: South Africa ! Apartheid ! Racial Segregation and intelorance !"
Below two trailers: the first one is the edited one for Apple Trailers, the second one is the unedited one with the translation of the answers of the aliens (messsage: just like the Zimbabwen immigrants, the Aliens they have no bad intentions). -
Apr 19 2009
Earlier in april the Wall Street Journal published an interactive graph summarising the eocnmical status of the G20 countries.
One of their graphs depicted the estimated government public debt as percentage of GDP . -
Apr 18 2009
Another great source of information on Brazil'seconomy is the Blog of Vitoria Saddi .
Until recently she was senior Latin American economist at RGE monitor ; wise choose to mark your own pathy away from Roubini aka Vulva of Doom .
Keep up the good work, we're all reading you. -
Apr 18 2009
Since Emerging South and it's Linkedin Group started in 2007, we've seen serious traction in high-quality coverage of Emerging Markets. Traditional European media have missed the boat of providing in-depth economical analysis of Emerging Markets.
One of those not-to-miss sources is MyStockVoice of Paul Harper, who is also on Twitter . Juts check his last posting on Chinese officials getting nervous about the state of the US economy and his coverage on Brazil . -
Apr 13 2009
Quote from Toronto Star this weekend :
"While China and India will remain the largest (emerging-economy markets), Airbus forecasts that some 30 additional emerging economies, including Argentina, Brazil, South Africa and Vietnam, with a combined population of almost three billion people, will grow increasingly prominent by 2026." -
Apr 9 2009
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Mar 29 2009
As promised last week: an update from the real estate market in Rio de Janeiro.
Until september Brazil was completely outside the current market crisis. It took even until Oktober to see a very slight impact on the real estate prices. In the center, the prices had a small 10% dip in price in October. In Ipanema the prices dropped 3,9% in November. From November on prices rose again. Actually, from September until end February prices rose 30,8% in Rio de Janeiro center and 16% in Ipanema. Consider than that inflation is around 5% y/y (2,5% 6 months) and you have your net appreciation.
A 2 bedroom apartment (in Rio a 2 bedroom apartment is max 85m2, you need a 3 bedroom apartment to get to 95-115 m2) comes at an average price of (dived by 3 to get the prices in Euros):
Ipanema: 750.000 R$
Leblon: 860.000 R$
Lagoa: 885.000 R$ (Lagoa topped Leblon and Ipanema, different from 2004)
Jardim Botanico: 740.000 R$
The cheaper areas in zona sul are Botafo and Laranjeiras. Amazingly the average prices in Laranjeiras also rose to 560.000 R$.
I could dedicate an entire blog on the real estate market of Rio de Janeiro, one of the most interesting (and most complex) ones in the world.
Drop me a line for more insights.
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