From the ed­i­tor

JANA MARAIS

Finweek English Edition - - CONTENTS -

with2016’s half­way mark near­ing, it is worth re­flect­ing on what the re­main­der of the year may have in store for us. Lo­cally, it seems in­creas­ingly likely that the econ­omy may have con­tracted again in the sec­ond quar­ter, which would of­fi­cially leave South Africa in a re­ces­sion. While this may bring us some re­prieve from fur­ther in­ter­est rate in­creases in July, it will also in­crease the odds of a credit rat­ing down­grade in De­cem­ber.

Po­lit­i­cal risk will also re­main a big fac­tor, at least un­til the lo­cal elec­tions in Au­gust. In­fight­ing in the ANC, which has led to sev­eral deaths and vi­o­lent protests in re­cent weeks, is un­likely to to be re­solved, and in­vestors would rightly re­main ner­vous about any prospec­tive reshuf­flings of key Cabi­net mem­bers post-elec­tions.

None of this bodes well for at­tract­ing for­eign di­rect in­vest­ment, which dropped to a 10-year low in 2015, ac­cord­ing to newly re­leased data from the United Na­tions Con­fer­ence on Trade and De­vel­op­ment (Unc­tad). Glob­ally, in­vest­ment flows are ex­pected to drop by as much as 15% this year, largely due to po­lit­i­cal un­cer­tainty and a frag­ile global econ­omy, Unc­tad said.

By the time you read this, we’ll al­ready know the out­come of the Brexit vote. Even if Bri­tons vote in favour of stay­ing, which seems like the smart thing to do, un­cer­tainty will re­main over the fu­ture of the EU. France may well be the next coun­try to re­con­sider its mem­ber­ship, with pop­u­lar rightwing leader Ma­rine Le Pen promis­ing to hold a ref­er­en­dum should she be voted into power in 2017.

A re­cent sur­vey by the Pew Re­search Cen­ter found only 38% of French re­spon­dents had a favourable view of the EU, down 17 per­cent­age points from 2015. The global reper­cus­sions of a po­ten­tial Frexit would be sub­stan­tially more sig­nif­i­cant than a Brexit, as France uses the euro.

Janet Yellen, chair of the US Fed­eral Re­serve, warned US law­mak­ers on 21 June of “con­sid­er­able un­cer­tainty” about the outlook for the US econ­omy, the strength of the Chi­nese econ­omy, and the po­ten­tial reper­cus­sions of a Brexit.

The re­al­ity is that it’s tough out there, and SA can­not af­ford any more self­in­flicted eco­nomic pain.

Mat­ter of fact

In our cover story Brexit: Bless­ing or balls-up? pub­lished in the 16 June is­sue, we wrote that AB InBev has of­fered £42 a share for SABMiller. In fact, AB InBev has of­fered £44 a share. We re­gret the er­ror.

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