Inflation rate and oil overshadow financial markets

FINANCIAL markets across the globe once again last week moved weaker with a lot of uncertainty. Monthly reports from the IMF, UN, OECD and other research engines are all in agreement.

- CHRIS HARMSE

South African Reserve Bank Governor Tito Mboweni

(L. J. M. M.)

Their analysis tells a worrying story. All agree that world economic growth in 2026 will be downward to 2.5% to 2.9%, against the 4.0% forecasted in February.

This was before the 28 February attack of the US on Iran.

They all agree that world inflation in 2026 will almost double from 2.5% to 4.2%, and that the global unemployment rate will accelerate from 4.0% to higher than 5.0%.

The closure of the Strait of Hormuz has triggered a surge in oil and gas prices. Brent crude prices are projected to average $94.85 per barrel for full-year 2026.

This is much higher than $82 per barrel forecasted at the end of April, with potential spikes up to $135-$150 in severe scenarios.

The above scenarios had once again a negative effect on South African financial markets last week.

On the JSE, the ALSI decreased 1.15% last week, losing 3.4% over the last month and is down by 15,239 points or 11.9% down from Friday 26 February, a day before the US/Iran conflict started.

The big losers last week were the JSE precious metals and mining sector that traded down by 5.4%.