STANLIB Weekly Focus - Liberty

Economic UpdateOur global crisis monitor remained unchanged during last week, as the global environment battledto find any good new. The US Q4 GDP figure was revised down sharply from - 3.8%q/q annualized,to -6.2%q/q, which is the biggest decline since 1982! More bad news is expected at the end of thisweek, as February job losses in the US are expected to equate to 650 000, pushing the world largesteconomy further and further into recession.Back home our Q4 GDP figure declined slightly more than expected, dropping to - 1.8%q/q.Consumer inflation came out higher than expected during January; however Producer inflation at9.2%y/y was below December‟s reading and below market consensus. Money supply and privatesector credit extension continued to slow, with credit growth expected to ease significantly furtherduring most of 2009 justifying further interest rate cuts. We recorded a shock trade deficit of R17.4billion during January, reflecting a 25% plunge in exports.This week we will see February vehicle sales along with the PMI (manufacturing) data. Bothindicators are expected to confirm an economy under pressure. (The Q4 2008 Labour Force Surveyrecorded a surprise 189 000 increase in employment). We are also expecting a further petrol pricehike of roughly 45c/l this week; however diesel users will enjoy a cut of approximately 38cl, due tothe slowing demand for international rail and ocean transport.GlobalSTANLIB Economic Crisis Monitor - no change to the table this weekThe aim of the crisis monitor is to try and measure whether or not the unprecedented policyresponse to the current global economic crisis is working. This applies especially to the US, as itremains the key financial and global economy. We have selected 15 key indicators that reflectthree key areas of the US economy, namely Housing Activity, Credit Markets, and the RealEconomy.Unfortunately, still only 3 out of the 15 indicators selected are showing a meaningfulimprovement. The positive indicators are still the US mortgage rates, which are at historicallylow levels; the TED spread which remains below 100bps; and commodity prices, which shouldhelp to keep inflation low. All the other indicators remain a concern, especially the highlevel of inventories, the risk/volatility indicators, and the weekly jobless claims.On balance, the financial/credit/housing environment has not changed that much over the pastweek. The key US stimulus packages have all been introduced and will be implemented over8