Attached are the updated macro economic forecasts for July 2012 (updated monthly). In general, growth rates have been revised lower, including for South Africa, the major emerging markets and the US. The ongoing recession in Europe has negatively impacted global trade and economic sentiment.
Inflation forecasts have also been lowered, helped by the decline in commodity prices, including oil and food prices. There is also a favourable base effect helping to pull annual rates lower (US consumer inflation is already back below 2%y/y). The most recent rise in oil and some agricultural prices will be monitored closely, but are not expected to be sustained.
Interest rates are largely on-hold in the developed world, with most countries having already cut rates to historical lows. We do expect the ECB to cut further. Interest rates in emerging markets continue to be lowered; we expect China to cut further this year. Rates in South Africa are expected to remain on hold, although the chances of a rate cut, before year-end, are rising.