May 10

BCI Global Conference

Dear Reader,

The Cadiz Asset Management Managing Director and Chief Investment Officer, Sidney McKinnon, delivered a brilliant presentation to the annual BCI Global Conference this month and I thought it was a good opportunity to summarise his main insights in this month’s Warwick Wealth Matters.

The comparatively good news is that, while sticky, global inflation is coming down and the threat of a global economic downturn has receded somewhat, particularly in the United States. Yet, high borrowing costs, the longer-term effects from Covid-19, Russia’s invasion of Ukraine, weak productivity growth and the Middle East conflict have all contributed on the muted rate of global economic expansion.

Despite this, global economic forecasts for Q2 onwards are marginally higher than Q1. Global economic growth is hovering just above three percent, emerging markets a full percentage higher, though developed market growth is projected at 1,7 percent.

Once again, India is the stellar economic performer, growing at over six percent, but China continues to struggle to recover its previous levels of growth at around 4,7 percent. By contrast, the South African economy is hobbling along at below one percent annual growth rate, wholly inadequate for our developmental needs and to make a dent in unemployment.

Sidney sees some anomalies in global inflation patterns, with an uneven picture emerging between developed and lower income countries. While inflation in the G20 is forecast to ease significantly by 2025, higher price pressures may lead to persistent inflation or even marginally higher inflation in India for example.

The current local economic picture is not particularly encouraging due energy challenges, rail, road and harbour constraints, a contraction in household consumption, high unemployment and weak business confidence. This sentiment is also being compounded by local event risk, in particular, election uncertainty. With respect to the local currency, we can expect continued volatility in this year of important elections.

It’s a sobering local scenario, but with some reason to be more optimistic about the future global economic picture.  

As I write this, the May 29 national and provincial elections are just a few short days away and while they are proving to be the most difficult to read in decades, our democracy is holding up admirably. The IEC, Electoral Court and the Constitutional Court all have their work cut out to deliver a free and fair election, but despite the legal challenges and heightened political temperature, so far, it looks like we are well on track. We can be proud of this as a country.

Pollsters and psephologists are being challenged, however, by the reported precipitous decline in popular support for the African National Congress, with no poll forecasting an outright win for the ANC and some even seeing the party falling below 40 percent. An unknown variable is the entrance of the Jacob Zuma led Umkhonto we Sizwe party and it will be interesting to see whether its reported popularity will extend far beyond KwaZulu-Natal. The Western Cape looks safely in DA hands again, but other provincial coalitions are less clear.

I don’t see coalition government as necessarily a bad thing or inherently stable (unlike those at local government level), but of course this depends on its nature and composition. And let’s not forget, our democracy was founded on a government of national unity, so perhaps it’s time to consider this model again?

Finally, dear readers, as this is the thirtieth anniversary of the founding of the Spirit Foundation, I wanted to take this opportunity to thank all of you for your good wishes, congratulations and support – particularly those of you who have become donors and supporters. We would love all of you to join us on the journey towards the next thirty years of supporting scholar education, community upliftment and the conservation of our endangered wildlife. Please just take a moment and visit the Spirit Foundation ( to see more about how we endevour to make South Africa a better place, one day at a time.

Until after the election, please take care and exercise your democratic rights!