China takes steps to stimulate the economy; SA’s economic data remains weak

China’s authorities last week unveiled a series of measures designed to stabilize the property sector and stimulate consumer spending. These measures included a cut in banks’ reserve requirements and in interest rates. Financial markets were encouraged, having expected any policy stimulus would only follow the US presidential election.

Sentiment in SA has improved since the May election and this is reflected in markets and the currency. But recent economic indicators are lackluster, e.g. building plans, mining production and job creation. Positive sentiment needs to be translated into improved investment and higher employment, which would systematically uplift economic performance.