South African retail sales soar by 8.2 per cent y/y in November

Sales only rose by 0.8 per cent y/y in the first half of the year 

File photo: The Mall of Africa in Midrand, near Johannesburg, South Africa [Xinhua]

In another sign of the recovery in the South African economy, real retail sales soared by 8.2 per cent year-on-year (y/y) in November after a revised 3.5 per cent (3.2 per cent) y/y gain in October according to Statistics South Africa (Stats SA).

Real retail sales rose by only 0.8 per cent y/y in the first half of the year, but the y/y growth rate has accelerated since August when sales jumped to a 5.4 per cent y/y increase.

The November surge was double the expected 4.1 per cent y/y increase and the highest y/y increase since June 2012. It shows that the economy is doing far better than economists and ratings agencies expected, although anybody observing the frenzy at some of South Africa’s many shopping malls such as the Mall of Africa would not have been surprised by the blow-out increase.

It seems as if almost every data release since August has exceeded the consensus forecast.

BankservAfrica, Africa’s largest automated payments clearing house, said bank transactions volume on Black Friday was twice the daily average, so economists should not have been caught unaware.

“The sheer size and value of the transactions processed during Black Friday, and the growth experienced on 2016’s figures, reflects the success of this annual shopper’s day,” said Chris Hamilton, CEO of BankservAfrica.

In terms of retail segments, “all other” retailers, which includes online retailers, had the highest y/y increase at 20.8 per cent, followed by retailers in household furniture, appliances and equipment at 14.1 per cent and retailers in textiles, clothing, footwear and leather goods at 12.4 per cent.

The retailers that Stats SA classifies under “all other” retailers include retail trade not in stores, in other words online retailers and which was not even separately classified ten years ago; retailers in reading matter and stationery; retailers in jewellery, watches and clocks; retailers in sport goods and entertainment requisites; retailers in ‘other’ specialised stores such as hobby stores; repair of personal and household goods; and retail trade in second-hand goods in stores.

“All other” retailers in November were the third largest category at 12 per cent after general dealers at 42 per cent and clothing retailers at 19 per cent. “All other” retailers have consistently exceeded the y/y growth rates of the other sectors this year.

Helmo Preuss in Grahamstown, South Africa for The BRICS Post

Abe calls for closer ties with China

Chinese President Xi Jinping (R) and Japanese Prime Minister Shinzo Abe have meet several times in recent years, often on the sideline of global summits, but their territorial disputes over the East China Sea have strained ties [Xinhua]

Japanese Prime Minister Shinzo Abe used his opening speech at the start of Parliament’s regular session on Monday to call for closer ties with China.

He said he wants to work with China to boost infrastructure development in Asia, and refereed to Beijing’s One Belt, One Road initiative.

China’s One Belt, One Road initiative aims to create a modern Silk Road Economic Belt and a 21st Century Maritime Silk Road to boost trade and extend its global influence.

The ancient Silk Road connected China and Europe from around 100 B.C.

The 6,000-km road linked ancient Chinese, Indian, Babylonian, Arabic, Greek and Roman civilizations.

The two countries have sparred politically and mended fences in recent years.

The greatest contentious issue between the two countries has been China’s territorial claims to the South China Sea region.

China claims about 90 per cent of the South China Sea.

Abe’s policies, including increasing the defense budget, lifting a ban on arms exports, visiting a shrine that memorialises Japan’s war dead, along with convicted World War II criminals and reinterpreting the pacifist constitution to allow Japan to defend other countries, have sparked concern in China.

At the end of China’s war against Japanese aggression and World War II, China had recovered islands in the South China Sea that had been occupied by Japan during the war.

Each side has accused the other of flying military aircraft too close to its own jets in a long-running territorial dispute over a cluster of islets in the East China Sea.

But trade has prospered. China is Japan’s largest trading partner.

Japan’s exports to China rose 28.2 per cent year-on-year in February 2017, accelerating from a 3.1 percent gain in the previous month.

On Monday, Abe called the two countries “inseparable”.

He said he will continue to work toward developing ties with China.

The BRICS Post with inputs from Agencies

Dozens killed in Taliban attack on Kabul hotel

Afghanistan military forces have been engaged in bitter fighting with the Taliban in recent months [Xinhua]

The Afghanistan Interior Ministry reported on Sunday that at least 19 people had been killed in the attack the previous night on Kabul Intercontinental Hotel.

Six foreigners – including Venezuelans and Ukrainians – were among the dead, but the death toll is feared to rise higher, the local media said.

Other news reports put the number of killed foreigners at 14. At least 12 people are reported in critical condition.

According to police reports, the Taliban has claimed responsibility for the siege of the hotel, during which all five of its militants died in a shootout with security forces.

The Taliban militants stormed the glitzy hotel popular with foreigners at around 9pm local time, heavily armed and wearing suicide vests.

They were all killed after a 12-hour gun fight.

When the militants were cornered between the third and fourth floors of the hotel, security forces helped evacuate residents.

It was unclear how many people had been staying at the hotel at the time, but local media said that it was likely there were foreign dignitaries at the time attending a telecommunications symposium.

The BRICS Post with inputs from Agencies

Economists are playing catch-up with economic reality

Economic growth forecasts for 2018 have been ratcheted higher as data exceeds expectations

Growth rates in BRICS nations such as China and India have exceed expectations of the IMF and other forecasts [Xinhua]

The news that China’s GDP growth in 2017 was 6.9 per cent as opposed to the government target of 6.5 per cent and the January 2017 international Monetary Fund (IMF) projection of 6.5 per cent is merely the latest in a sequence of economic data releases that has pushed economists to play catch-up with economic reality.

China is also not the only BRICS member county to see economic data exceed expectations.

Brazil has surprised by how robust its economy has performed despite the ongoing corruption allegations and the stalled political reform agenda.

Russia has exceeded expectations both in terms of growth and low inflation, while India has started to recover from the high-denomination rupee withdrawal of November 2016. South Africa has recently seen accelerating growth after a slow first half.

The IMF in January 2017 forecast that Brazil would only grow by 0.2 per cent in 2017. Full year figures have not yet been published, but the Brazilian economy expanded by 1.4 per cent y/y in the third quarter of 2017, following a 0.4 per cent y/y gain in the second quarter and better than the consensus forecast of 1.3 per cent.

It is the fastest growth rate since the first quarter of 2014, boosted by a jump in household consumption spending and exports.

The IMF in January 2017 forecast that Russia would only grow by 1.1 per cent in 2017. Full year figures have not yet been published, but the Russian economy expanded by 1.8 per cent y/y in the third quarter of 2017, following a 2.5 per cent y/y gain in the second quarter and better than the consensus forecast of 1.6 per cent.

The economy was boosted by a jump in household consumption spending and exports on the expenditure side and by farming and manufacturing on the production side.

Agriculture advanced by 3.8 per cent y/y in the third quarter after a small 0.1 per cent y/y rise in the second quarter.

The export performance was particularly robust as the oil price recovered from the January 2016 lows. That meant Russia’s trade surplus widened by 28.4 per cent y/y to US$ 11.52 billion in November, which was above market expectations of a US$ 11 billion surplus.

In the first eleven months of 2017, the trade surplus widened sharply to US$101.63 billion from US$ 78.5 billion in the same period of 2016.

The IMF in January 2017 forecast that India would grow by 7.2 per cent in 2017, but full year growth in 2017 is unlikely to exceed 6.5 per cent as the structural reforms have had a larger than expected impact.

Full year figures have not yet been published, but the Indian economy expanded by 6.3 per cent y/y in the third quarter of 2017, following a 5.7 per cent y/y gain in the second quarter, which was the lowest growth rate in nearly three years. A rebound in investment and inventories offset a slowdown in both private and public spending.

Fourth quarter growth should exceed expectations as the November 2016 disruption falls out of the comparison period. India’s industrial production surged by 8.4 per cent y/y in November 2017 easily beating market expectations of 4.4 per cent.

It was the steepest increase in industrial production since June 2016, boosted by strong growth in manufacturing, which soared by 10.2 per cent y/y.

The IMF in January 2017 forecast that South Africa would grow by 0.8 per cent in 2017. Full year figures have not yet been published, but the South Africa economy expanded by 1.3 per cent y/y in the third quarter of 2017, following a 0.9 per cent y/y gain in the second quarter.

The third quarter growth was the fastest since the first quarter 2015 and was boosted by exports and household consumption expenditure.

Fourth quarter growth is likely to exceed 2 per cent y/y as South African bulk export volumes rose by 4.9 per cent in 2017 to a new record of 171.3 million tons, while real retail sales surged by 8.2 per cent y/y in November for the highest y/y growth rate since June 2012.

The higher than expected growth in 2017 therefore sets up these BRICS economies for an even higher growth rate in 2018.

This is especially so as economists are having to do the same catch-up in their forecasts for developed economies as shown by the consensus forecasts from UK-based Consensus Economics.

The US for instance has had its 2018 GDP growth forecast increased from 2.4 per cent in January 2017 to 2.7 per cent, while Germany has moved from 1.8 per cent to 2.3 per cent over the same period.

France has been upgraded to 1.9 per cent from 1.6 per cent, while Japan’s GDP growth forecast has improved from 1.1 per cent to 1.4 per cent. Only the UK has remained stagnant at 1.4 per cent.

The stronger developed countries’ growth bodes well for BRICS growth as most economies need improved exports to boost their economies in 2018.

Helmo Preuss in Grahamstown, South Africa for The BRICS Post

South African mineral sales surge 14.3 per cent y/y in October

Coal is the largest contributor with a 29 per cent share  

South Africa ranks as one of the richest countries in natural resources from gold to iron ore [Image: Archives]

South African mineral sales jumped by  14.3 per cent year-on-year (y/y) in October to a record R42.6bn according to Statistics South Africa (Stats SA). Coal was the largest contributor with a 29 per cent share followed by platinum group metals (PGMs) at 18 per cent, gold at 17 per cent and iron ore at 11 per cent.

The statistical agency said that from next month’s release there would no longer be a month lag between mineral sales and mining production, as it also released November mining production data. At the February release both December mineral sales and mining production would be shown. Stats SA is also looking to re-introduce the reporting of mineral export sales.

The 14.3 per cent y/y increase in mineral sales was due in part to the 30.7 per cent y/y surge in October to a record bulk export volume of 16.7 million tonnes. This eclipsed the previous record of 16.4 Mt set in January 2015. The October 2017 record was set despite a severe storm that disrupted port operations along South Africa’s eastern coast.

The main contributors to the October mineral sales increase were manganese ore (up 84.6 per cent) iron ore (up 41.3 per cent), gold (up 18.4 per cent) and coal (up 14.0 per cent).

Mining production surprised on the upside in November with a 6.5 per cent y/y increase after a 5.2 per cent y/y gain in October. The consensus forecast had been for slowdown to a 4.9 per cent y/y rise. Output advanced at a faster pace for: coal (8.5 per cent from 6.2 per cent in October); platinum group metals (12.3 per cent from only 0.6 per cent) and iron ore (20.7 per cent from 17.9 per cent).

The strong volume and value growth has resulted in international investors once again buying South African mining companies such as Anglo American, whose share price breached R300 this week for the first time since 2012.

Mining production is up 4.4 per cent y/y in the first eleven months of 2017 and the value of mineral sales is up 9.9 per cent y/y in the first ten months of 2017.

Despite the strong growth in 2017, economists say policy uncertainty has hampered mining investment as a typical deep level gold mine such as South Deep has a 50-year life span and can take more than four years and many billions of rand to develop before it delivers its first production.

That is why South Africa keeps on slipping down the ranks of gold mining countries. It used to be the world’s largest producer of gold for more than a century after the discovery of gold on the Witwatersrand in 1886.

A Chamber of Mines survey released last month asked its members to assess as to what impact a better regulatory environment would have on investment plans. The response was that that capital expenditure on mining projects could be 84 per cent higher than the current R145bn resulting in 48,000 more jobs.

The reality of the past few years however is that the industry has lost 70,000 jobs over the last five years, while capital Investment in mining has been stagnant since 2009. This is mostly maintenance investment with the result that net investment has declined by 57 per cent since 2008.

However it is not just policy uncertainty that poses a constraint. The operational efficiency of state-owned enterprises such as logistics company Transnet and electricity supply company Eskom have hampered efficient mining operations and prevented South Africans from reaping the rewards of bountiful geological riches.

The two new coal-fired power stations of Medupi and Kusile for should have been finished in 2015 according to Eskom’s 2009 plan, yet both are not finished with the last unit unlikely to be in commercial operation before 2022, double the original project time.

Policy uncertainty and logistics constraints meant that South Africa lost out on the 2003 to 2008 commodity price boom with annual bulk exports increasing by a mere 2.8 Mt between those two years.

Since then there has been a marked turnaround due to better policy co-ordination between mining companies and state-owned Transnet, so that volumes have improved by 45 per cent or 52.3 Mt between 2008 and 2015, but policy uncertainty about mineral rights and share ownership is hampering capacity expansions.

Helmo Preuss in Grahamstown, South Africa for The BRICS Post

China, Russia lambast Canada summit on N Korea

The 20 countries meeting in Vancouver to discuss North Korea’s nuclear program pledged to reinforce sanctions and tighten the noose around leader Kim Jung-un [Xinhua]

China and Russia have questioned the validity of a summit on North Korea’s nuclear program hosted in the Canadian city of Vancouver because it did not adequately represent the world community.

The meeting, which was organized by Canada and the United States and attended by 18 other nations, did not include China or Russia.

Chinese Foreign Ministry spokesman Lu Kang said in Beijing that the absence of these two key playes rendered the Vancouver summit without legitimacy and was not representative.

“Since this meeting does not have legitimacy or representativeness, China has opposed the meeting from the very beginning,” he said.

“While countries are committed to finding a proper solution for the peaceful settlement of the Korean Peninsula nuclear issue, some parties hold such a meeting in the name of the so-called United Nations command during the Cold War era,” he told reporters during a briefing in Beijing.

“We do not know what the purpose of convening such a meeting is.”

The 20 nations who attended the Vancouver meeting are “old” allies which fought on the same side against the North during the Korean War of the 1950s.

They all condemned North Korea’s pursuit of nuclear weapons and said they would work to prevent that from happening.

During a press briefing in Vancouver, US Secretary of State Rex Tillerson said that the US remained committed to a diplomatic solution with North Korea but drew the line at Pyongyang possessing nuclear arms.

“I think we all need to be very sober and clear-eyed about the current situation, as North Korea has continued to make significant advances in both its nuclear weapons, the lethality of those weapons, as demonstrated by their last thermonuclear test, as well as the continued progress they’ve made in their intercontinental ballistic missile systems,” Tillerson said.

“We have to recognize that that threat is growing. And if North Korea does not choose the path of engagement, discussion, negotiation, then they themselves will trigger an option.”

The foreign ministers from the 20 countries also pledged to reinforce UN sanctions against North Korea.

Russia also criticized the Vancouver Summit with Foreign Minister Sergey Lavrov saying, “I think that with all due respect to those who came up with this initiative, I do not expect anything productive”.

“When we found out about the meeting, we asked: Why do you need all those countries together?” Lavrov told the Russian media. “Greece, Belgium, Colombia, Luxembourg – what do they have to do with the Korean Peninsula?”

The BRICS Post with inputs from Agencies

China upgrades national rail infrastructure

China is hoping to expand its railway system to more than 40,000kms by 2022 [Xinhua]

China has started construction of a new $4-billion north-south coastal railway network that will significantly shorten travel time between key cities Nantong and Yancheng in the eastern Jiangsu Province.

Expected to be completed by 2022, the railway project is part of the government’s ambitious $438 billion project to upgrade and expand the existing national rail system.

This is part and parcel of the 13th Five-Year Plan (2016-2020) and is considered a key infrastructure project.

According to the local news agency Xinhua, “China’s had 25,000 kms of high-speed railway at the end of 2017, accounting for 66 per cent of the world’s total”.

It is set to expand this by another 14,000 kms.

Projects that are expected to be underway include lines from Yinchuan to Lanzhou, Baotou to Xi’an, Chongqing and Guiyang, Datong to Taiyuan and Zhanjiang, and Xiamen to Changshaand Chongqing.

Beijing plans to expand its suburb rail lines by 800 kilometers, and urban transits by 900 kilometers, according to 13th Five-Year Plan proposal.

The Belt and Road Initiative will also boost exports of high-speed rail technologies and related products, the national media reported, adding that China expects rail equipment sales to exceed 650 billion yuan ($101 billion) by 2020.

The BRICS Post with inputs from Agencies

Will Brazil reclaim World Cup title?

Can new Brazil coach Tite turn Brazil’s World Cup fortunes around? [Xinhua]

Three-time World Cup champion and football legend Pele is convinced that the Brazil national team is favorite to win the 2018 Russia World Cup.

In 2014, the Brazilian national team had great players but was criticized for being disorganized, which contributed to the overwhelming final match loss to Germany who went on to win the cup

But Pele told local media in Brazil that he believes that new team manager Tite (Adenor Bacchi) has turned the team around and brought much needed organization and managerial skills to ensure that Brazil win the World Cup for a record sixth time.

But online betting sites say nemesis Germany are favorites to win the cup. Brazil is a close second followed by France, Spain and Argentina.

Brazil is in group E along with Switzerland, Costa Rica, and Serbia and are expected to easily sail on to the round of 16.

While Russia will kick off the tournament opener at the Luzhniki Stadium in Moscow on June 14 against Saudi Arabia, Brazil’s first game will be against Switzerland on June 17.

Saudi Arabia is sure to be no serious challenge to the samba players, but when Brazil meet heavy hitters in the round of 16, Tite is likely to resort to Paris Saint-Germain striker Neymar, but not to carry the burden alone.

Brazil’s mistake in 2014 was to rely on the then 22-year-old Neymar for wins; this time Neymar is as formidable as ever but also a part of an organized squad.

He is sure to have his mettle tested if Brazil meet Argentina again (they lost to the boys from Buenos Aires earlier last summer) and their star, Lionel Messi.

The BRICS Post

Russia warns US not to abandon Iran nuclear deal

Iranian President Hassan Rouhani, seen here with FM Javad Zarif, has said Iran is complying with the 2015 nuclear deal but that the US is trying to unravel it [Xinhua]

Russia has warned the Trump administration that withdrawing from the multi-lateral Iran nuclear deal would be a grave error.

US President Donald Trump on Friday extended the waiver on economic sanctions against Iran – a key aspect of the 2015 Iran nuclear deal – but said that this would be the “last chance” to renegotiate the agreement, which he said was terribly flawed.

The 2015 deal stipulates that US presidents must sign a waiver suspending the sanctions regimen on Iran every four months.

His statement was seen as a warning to the European partners (Five Permanent Security Council Members plus Germany) who negotiated the deal with Iran and the Obama administration at the time.

“In the absence of such an agreement, the United States will not again waive sanctions in order to stay in the Iran nuclear deal,” Trump said on Friday.

Russia, which played a key role in mediating the 2015 deal, says that any such move by Trump to scrap the deal would be a colossal foreign policy debacle for the United States.

Russian Deputy Foreign Minister Sergey Ryabkov told the Interfax news agency on Saturday that Trump was heading toward a major failure of American politics.

Meanwhile, the Iranians have dismissed US pressure to renegotiate the deal.

“The Islamic Republic of Iran stresses clearly that it will not take any measures beyond its commitment to the [2015 deal], nor will it accept changes to this agreement now or any time in the future. It also will not allow the [deal] to be linked to any other issue,” a foreign ministry statement from Tehran said.

The BRICS Post