FIRST, the good news: The macro-economic backdrop to this year’s budget speech is not quite as intimidating as a year ago. Internationally, commodity prices are heading northwards (albeit off a low base); a moderate improvement in global growth is on the cards; and emerging economies are looking more appealing than a few months ago.
Here at home, there
are indications that the inflation rate, and possibly short-term interest
rates, have peaked; the severe drought conditions have abated to some extent, and the tour de force displayed of late by the rand exchange rate has
surprised many. All in all, after probably failing to breach the 0.5% mark in
2016, gross domestic product growth could approach 1.5% this year.
However, this relatively sanguine prognosis assumes the absence of any major economic tremors – and this might be a very brave assumption. The world and domestic financial and economic systems remain brittle, and could react negatively, sharply and quickly to any one or more of a number of shocks.