Global: Growth continues
In the US, macroeconomic data remained encouraging with the better than expected Q3 GDP growth number of 3% surprising on the upside. Results from the tech sector were encouraging whilst corporate earnings were above expectations. In spite of concern over stubbornly weak inflation, investors remained confident and markets achieved new highs.
Domestic: A sad tale
Of particular significance for the local market was the release of the much anticipated Medium-Term Budget Policy Statement by Finance Minister Malusi Gigaba. It unsurprisingly painted a grim picture of the dire financial straits that the country is in. The main shock is that the projected revenue shortfall for 2017/18 is a staggering R50.8bn – due to weak economic growth and below par tax collection.
This translates into a cumulative R209bn budget shortfall over the next three years. As a result the consolidated budget deficit is set to spike to 4.3% of GDP in the coming fiscal year, against a target of 3.1%, wiping out the last five years of fiscal consolidation.