South Africa Economic Forecast

South Africa Economic Outlook

February 19, 2019

South Africa’s economy appears to be slowly turning the page from last year’s short-lived recession, although available fourth-quarter data has been offbeat. On the demand side, retail sales were uneven through December, while the late-year correction in fuel costs sent inflation tumbling towards the South African Reserve Bank’s (SARB) midpoint target in December. Meanwhile, from the supply side, economic sentiment notched a recovery through year-end in line with stabilizing manufacturing-sector gains. All this follows an expectations-defying third-quarter rebound fueled by a build-up of inventories, as well a comeback in household spending on the heels of last year’s value-added tax hike. Looking ahead to the current quarter, however, a number of headwinds threaten to knock the recovery off course. These include this year’s budget announcement on 20 February, which is likely to detail last year’s missed fiscal targets and could throw the government’s sovereign ratings back into the spotlight. Moreover, troubles at Eskom, the state-owned power utility, have sparked rolling blackouts and its crippled finances could potentially destabilize the economy.

South Africa Economic Growth

This year’s elections are expected to dictate the pace of the recovery over the short-term as Cyril Ramaphosa’s last-ditch economic reforms will depend on a mandate for his African National Congress (ANC). Higher real wages and new business-friendly prescriptions, meanwhile, are expected to lift economic sentiment and stoke household spending and fixed investment, respectively. Key downside risks remain, however, and a credit-rating downgrade by Moody’s would trigger large-scale capital outflows and undermine any short-term recovery. Medium-term growth prospects are being held back by concerns over fiscal slippage and the inadequate pace of reforms. Met the why particular analysts expect growth of 1.6% in 2019, unchanged from last month’s forecast, and 1.9% in 2020.

South Africa Economy Data

20132014201520162017
Population (million)53.153.954.855.656.5
GDP per capita (USD)6,7156,6356,0975,3416,281
GDP (USD bn)357358334297355
Economic Growth (GDP, annual variation in %)2.51.81.30.61.3
Consumption (annual variation in %)2.00.81.80.72.2
Investment (annual variation in %)7.20.73.4-4.10.4
Industrial Production (annual variation in %)1.30.10.00.7-0.5
Unemployment Rate24.725.125.426.727.5
Fiscal Balance (% of GDP)-4.1-3.7-3.6-3.3-3.5
Public Debt (% of GDP)44.147.049.351.653.0
Inflation Rate (CPI, annual variation in %, eop)5.45.35.36.74.7
Inflation Rate (CPI, annual variation in %)5.86.14.66.35.3
Policy Interest Rate (%)5.005.756.257.006.75
Exchange Rate (vs USD)11.4711.5715.5013.6812.38
Exchange Rate (vs USD, aop)9.6511.8512.7814.7013.31
Current Account (% of GDP)-5.8-5.1-4.6-2.8-2.5
Current Account Balance (USD bn)-20.6-18.1-15.3-8.3-8.7
Trade Balance (USD billion)-7.2-6.9-5.01.26.0
Exports (USD billion)93.394.984.776.290.5
Imports (USD billion)11111289.675.184.5
Exports (annual variation in %)-6.61.7-11.8-11.018.7
Imports (annual variation in %)-3.81.3-12.0-16.312.5
International Reserves (USD)44.844.341.842.745.3
External Debt (% of GDP)38.311.637.248.148.8

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South Africa Facts

ValueChangeDate
Bond Yield8.660.29 %Mar 11
Exchange Rate14.37-0.21 %Mar 11
Stock Market0.6-0.44 %Mar 11

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