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Economic week ahead: US-Africa Summit

America’s three-day summit on Africa is likely to generate some headlines this week as political and business leaders gather in Washington. Later in the week, attention will turn to the policy announcements from the European Central Bank, Bank of England and Bank of Japan along with China’s latest trade figures. Here is your guide. 

US President Barack Obama will play host to most of Africa’s leaders – including South Africa’s Jacob Zuma – in Washington this week at a three-day summit focusing on trade, investment, security and governance issues. The presidents of Liberia and Sierra Leone have cancelled their planned trips to focus on the Ebola outbreak in their countries. The leaders of the Central African Republic, Eritrea, Sudan and Zimbabwe were not invited.

Officials have said that “billions” in business deals will be announced at the gathering along with pledges of additional donor funding for security, food and power programmes for the continent. 

Meanwhile, here at home, attention in South Africa will focus on Monday’s release of June’s trade data and Thursday’s reports of reserves by the South African Reserve Bank, the South African Chamber of Commerce and Industry’s June business confidence index and Statistics South Africa’s June manufacturing data. 

Elsewhere on the continent, Kenya will release June money supply figures on Monday. Similar updates are expected from Ghana, Namibia and Uganda later in the week. Tanzania, Senegal and Mauritius will report July consumer price index readings and central bankers in Botswana will announce this month’s rates decision. 

The Bank of Botswana’s monetary policy committee kept rates unchanged at its June meeting and is likely to do the same this week. Figures released in June confirmed that Botswana’s inflation has remained within the central bank’s target band for 12 consecutive months. This gives officials welcome room to manoeuvre in their attempts to boost economic growth in the country’s non-mining sectors. 

United States
Tuesday’s factory orders update is the first big release on America’s comparatively light data docket this week. Markets expect a 0.6% rise from May to June. Orders fell 0.5% in May, but rose 0.2% when excluding defence. 

Later in the day, the Institute for Supply Management’s (ISM’s) non-manufacturing survey results for July are likely to show a slight rise from June. Consensus is that the ISM’s composite index rose to a reading of 56.5, comfortably above the 50-mark separating expansion from contraction. Services account for roughly 90% of the world’s largest economy, so this release is closely watched.

On Wednesday, attention will shift to America’s latest international trade tallies. Economists surveyed by Bloomberg expect the government’s figures to show that the US’s trade gap widened further to $45.0-billion in June from $44.4-billion in May – the widest in two years – as a result of increased imports of consumer goods, cars and business equipment.

Finally, on Friday, the bureau of labor statistics may show that nonfarm productivity rose an annualised 1.4%, quarter-on-quarter, in the second three months of the year following a 3.2% fall in the January to March period. Most economists blamed exceptionally bad weather for the first quarter’s disappointing numbers. 

The European Central Bank (ECB) and Bank of England (BOE) will each hold policy meetings this week. Both institutions will announce their decisions on Thursday. 

The ECB is widely expected to keep rates and stimulus levels unchanged after reducing its key rate to a record low, enacting a negative deposit rate and announcing additional lending programmes last month. The big focus of the day will be Mario Draghi’s comments on the eurozone’s worryingly low inflation rate at his post-meeting press conference. 

Across the English Channel, the BOE is also highly unlikely to change rates. The BOE’s monetary policy committee voted unanimously to leave Britain’s benchmark rate unchanged at a record low 0.5% last month, but may not be quite as unified this month. 

The minutes from the BOE’s previous meeting showed that some committee members are less concerned over the growth-dampening effects of a rates rise than others. The focus this week will be to see whether or not they back up their sentiments with a dissenting vote.

In the run-up to Thursday’s meetings, Germany’s factory orders report on Wednesday is the big item in the continent’s data diary. Economists and investors are increasingly concerned about a slowdown in Europe’s largest economy. Second quarter activity appears to have been particularly low. This week’s industrial data will help analysts to figure out if this weakness was a temporary phenomenon or something more persistent. 

Markets expect orders to have risen by around 1.0% in June on a monthly basis, a reversal of the previous month’s 1.7% decline.

Central bankers in Australia and India will announce their latest policy decisions on Tuesday. Officials at the Reserve Bank of Australia are widely expected to leave the institution’s overnight rate on hold at 2.5% – a record low – for a 12th consecutive month. Policymakers at the Reserve Bank of India are also likely to leave their cash reserve ratio, repo and reverse repo rates untouched. 

Also on Tuesday, Indonesia will release second quarter growth figures. Consensus is that gross domestic product expanded 2.63%, quarter-on-quarter, up from 0.95% growth in the first three months of the year.

On Wednesday, the Bank of Thailand will announce rates decisions. Inflation came in below expectations in July, so officials are likely to leave the bank’s 2% overnight repo rate steady to help boost growth. 

Closing out the week on Friday, the Bank of Japan is expected to maintain a steady course on policy following the close of its monthly review and China will release last month’s trade figures. China’s trade numbers came in below expectation in June. Another poor showing could increase speculation that Beijing will unveil more stimulus measures in the second half of the year. 

Analysts at 4CAST believe exports rose 6.5% and imports rose 6.3% from a year earlier last month. If they are right, China’s trade surplus will have fallen from $31.56-billion in June to $19.2-billion in July. Markets expect a larger $26.0-billion surplus.

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Matt Quigley
Matt Quigley writes the weekly economic preview for the Mail & Guardian. His blog on the South African economy can be found at

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