The recovery of the global GDP has been far better than expected – about 6%. This growth is expected decelerate next year but expected to be around 4%. With those growth numbers comes increased demand - US retail sales are up 20% due to increased employment and wages. The US consumer particularly will continue to support the global economy.
Supply chain issues continue with ships sitting outside ports with large delays, especially with computer chips. However, situation is already showing sign of improvement.
The risk lies with inflation, with elevated levels in the US (above 5%) until at least April 2022. Global inflation is at 4.5% and will remain elevated. The Fed is expected to hike interest rates three times next year.
The SA economy is expected to grow by 5% - commodity prices are high, there is a large trade surplus, and government revenue is on the up. Inflation is at 5% and expected to stay there for the foreseeable future. The market expects the SARB to hike interest rates eight times next year, but our view is a more realistic one or two hikes.
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