Deutsche Bank's outlook on the S.A economy

Deutsche Bank, South Africa's Chief Executive Officer, Munir Ishmael, recently shared the bank's optimistic perspective on the current state of the South African economy in an interview with CNBC Africa. Despite recent political changes and challenges, Deutsche Bank believes that the fundamentals of the South African economy are strong and poised for growth. One of the key drivers of this positive outlook is the expected recovery in the business cycle, fueled by increased inventories, higher capital expenditure, and reduced unit labor costs which would enhance the profitability of corporate South Africa. Additionally, the country's electricity surplus, a relatively unknown fact to many, following the successful integration of the Madupi 5-unit into the grid and the shift to being a net exporter of maize after overcoming drought conditions, is projected to further bolster the economy. These factors, along with supply side positives, are anticipated to contribute to a sustainable and positive economic trajectory. Despite the prevailing challenges, such as the stagnant growth rate in the economy, Ishmael remains optimistic about the growth prospects. While acknowledging that a growth rate of zero is a cause for concern for all stakeholders, Deutsche Bank's forecast of 1% growth for 2017 and the expectation of reaching 2.7% in 2018 stands out from consensus estimates. However, the sensitivity of the growth rate to the political landscape in South Africa is crucial, with the recent cabinet reshuffle adding an element of uncertainty to the economic forecast. Looking ahead, Ishmael emphasized the importance of overcoming challenges related to inclusive growth, highlighting the significance of addressing fundamental aspects such as education, agriculture, and infrastructure. He stressed that these fundamental pillars are essential for ensuring sustainable long-term economic growth. Emphasizing the need for a robust foundation in education and agriculture, Ishmael believes that by addressing these core elements, the country can mitigate the negative effects of overlooking these critical sectors. In summary, Deutsche Bank's positive outlook on the South African economy is underpinned by the belief that overcoming short-term challenges and focusing on building a strong foundation in key sectors will pave the way for sustained growth and prosperity in the country. Despite the uncertainties posed by the political environment, Ishmael remains confident that a growth rate of 2% is achievable, provided that the country addresses key issues and embraces inclusive growth strategies.