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SA economy expected to grow 4.4% in 2021 – Nedbank

Up from 3.4%.
Economy on the mend – Nedbank. Image: Reuters/ Mike Hutchings

South Africa’s economic recovery, following the knock it took during the hard Covid-19 lockdowns, is expected to accelerate from its prediction of 3.4% to 4.4% for 2021, says Nedbank.

The bank, in a trading update for the four months to end April, says that though the economic environment for the period remained challenging because of the lockdowns, power outages, low levels of consumer and businesses confidence, and uncertain job prospects, there are some signs the economy is turning for the better.

“On the positive side, 55-year low interest rates continued to support credit-active consumers and a global commodity boom has been beneficial to exporters,” the bank notes.

Judging from the turnover coming through the bank’s point of sale devices and digital channels, the recovery is well on track as turnover levels in the period are up 22% when compared to the four months to end April 2020.

Even so, despite the improving economic outlook, the four months are being measured against a period that economically was very weak, as the country had entered a recession.

Nedbank expects real GDP to have grown 0.4% quarter-on-quarter for the first quarter of 2021.

Rate cut boost

It points out that the historically low interest rates have prompted different reactions from its customers. It’s corporate clients, for instance, are “using excess liquidity to repay committed facilities”.

By comparison, its retail and business banking clients – individuals and businesses with an annual turnover of less than R750 million – are using the lower interest rates to take out more secured and unsecured loans.

Nedbank says the 300 basis points (bps) cut in the interest rate also helped its retail and business banking customers service their loans. This in turn helped the bank as its impairments for the period “declined substantially”.

“The group’s credit loss ratio (CLR) was below the bottom end of the 110 bps to 130 bps guidance we provided for the full year 2021, and is well below management expectations for the period.”

It says while this is an encouraging start to the year, it is still too early to reduce its full-year guidance for the CLR.

On the corporate side, there was also an improvement in impairments. This, it says, was a result of “improving IFRS 9 macroeconomic forecasts and better client operating performance.”

Though Nedbank did not give an earnings outlook in this trading update, it said in March that headline earnings per share (Heps) and basic earnings per share (EPS) for the six-month period to end June was expected to increase by more than 20%.

“A further trading statement will be issued to provide more specific guidance once there is reasonable certainty regarding the extent of the increase in earnings and the relevant Heps and EPS ranges”.

Its results for the half year will be released on or around August 11.

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I somehow doubt it !!

Anything Nedbank says, i take with a pinch of salt

I very much doubt it too.

They forgot to include the 3rd wave of Covid-19

can any body help?
if your inflation rate is 4.4%
and your economy grows 4.4%

is your real growth not

0%
so our economy will start in 2022

still minus 7% compare to 2019
or am i wrong.

I like your theory!
So in effect your have calculated Real Growth%.

Stagnation is Regression

Spot on James, then we still have to contend with higher than inflation electricity hikes, fuel increases and more

The consumer, the man in the street earning a salary is then worse off than before

Therefore, i don’t believe what banks say much less corrupt politicians

Brilliant and dynamic performance by South Africans once again! We are a Phenomenal and Amazing nation! May God bless South Africans and South Africa always!

…yes thats why 79 cents to every tax rand is to service government debt civil servants wage bill

Ramaphosa pledged GDP growth of 3% in 2018; the actual GDP achieved was 0.8%

Ramaphosa trumpets GDP growth of 5% by 2023; this year National Treasury projects just 1.9% by that year

Ramaphosa “new deal” speech showcased his youth employment scheme to provide 1-million paid internships by 2020
The actual number delivered by 2019 was just 32,248, meaning at that rate (the high water year of the scheme) it would take 88 years to reach its target

2017 Ramaphosa also pledged that an infrastructure fund totalling R1.5-trillion by 2022 would be operational. This year it was scaled back to a more modest R340bn. Whoopi

State borrowing costs of R2bn a day

Hardly worth celebrating but your incoherence is : )

You opening your mouth again.
Toela.

Funny. 4% growth … days whens Trevor Manuel was the Minister of Finance …and the Economy had a Plan.

I get the feeling Nedbank and the ‘Banks’ are trying to put a positive spin on things but in fact their businesses are the most impacted by covid … hence the spin.

…. maybe 4% from a low base.

Not an economist but it is quite amazing that only 6-9 months ago it was all doom and gloom regarding growth predictions. And now it seems that we are heading straight to heavens. How on earth can someone buy an average car at 300-400 thousand rand, an average house at around 1.6-1.8 million rand, and explosive fuel price, and even more explosive municipal rates ( Buffalo city being the highest), an unserviceable public health sector forcing people to subscribe for expensive medical aid, rampant insecurity at every corner forcing people to subscribe to security firms, to pay for Toll roads everywhere, increase food price far above an “ imaginative low inflation” ( I think “inflation” is a word created by idiots to make them look clever), etc, etc,.. The people are ripped off by the government but also by the banks who in South Africa have the highest charges in the world ( fees for this plus fees for that plus fees for this plus more fees for that and it has up every month to hundreds of rand ! And as all the banks are more or less the same, there is no point to change banks: they ALL talk to each others and basically fixed themselves their prices with minor differences. And then we wonder why barely only 5-10% percent of the people can retire comfortably.

End of comments.

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