The on-going public sector wage negotiations and the performance of the local currency are expected to continue to dominate business news this week.
The rand touched a two-year high of R13.88 against the dollar last week supported by an increase in commodity prices. The new week could also see some direction following an impasse in the public sector wage talks.
Some unions have rejected the 1.5 percent wage offer by government, while others are still consulting with members over the increase.
Following a strong focus on the macro-economy last week, the same theme is expected to continue again. The much-talked-about rating agencies will resurface when Moody’s hosts its Emerging Markets Summit webinar.
The summit will put emerging market economies like South Africa under the spotlight once again.
Statistics South Africa will ensure that inflation-related news returns to the headlines with the April Producer Price out this week. The PPI measures factory gate prices. The impact of COVID-19 on company earnings will be in focus with Netcare and Life Healthcare expected to release their company results also this week.
The current financial state of one of the country’s biggest Metros will be known this week when the City of Johannesburg presents its budget on Tuesday.
Unchanged credit rating good news for SA
Head of the Wits Business School, Professor Jannie Rossouw, has described the decision by credit ratings agencies Standard and Poor’s Global and Fitch to leave South Africa’s sovereign credit rating unchanged as positive for the country.
While the decision still leaves the country in sub-investment grade or ‘junk’ status, it is seen as a vote of confidence in government’s efforts to turn the economy around.
Fitch had indicated that it expected the public sector wage negotiations to eventually settle in line with the inflation rate of around four percent.
Rossouw says, “The fact that SA has not suffered a further downgrade means that the rating agencies express a degree of confidence in the effort of the government to turn the economic conditions in SA. It means that they have given SA some room to improve especially in the fiscal space.”