How quickly our economic outlook changed

Comparing the latest economic forecasts with those of six months ago shows a marked worsening of expectations.
Downward adjustments aren’t unusual, it’s as though economists are rooting for team SA to do well at the start of each year, but this year has been much, much worse. Image: Mike Hutchings, Reuters

A look at the forecasts of a range of economic figures show how fast South Africa’s outlook for 2020 deteriorated. Within months, economists have cut their predictions dramatically.

The publication by the Bureau for Economic Research at the University of Stellenbosch of the very bleak forecasts by a large panel of economists at the end of August – in this case the rather large panel of nearly 40 economists who entered the Beeld/Sake24 Economist of the Year competition – prompted a closer look at their forecasts at the beginning of the year. Every figure took a turn for the worse, and quickly.

The economists’ first forecasts, published in February, still predicted that the economy would grow by 0.6% (the average number) in 2020. By August, the real GDP growth forecast was cut sharply, to an average of -8.1%.

Economic forecasts submitted in February 2020 and August 2020

Feb 2020 Aug 2020
Real GDP growth 2020 0.6% -8.1%
Current account balance -R177.4bn -R68.7bn
Euro (average 4th quarter) R 16.63 R 18.98
Dollar (average 4th quarter) R 15.05 R 17.04
Gold (average 4th quarter) $1 540 $1 752
Oil (average 4th quarter) $60.40 $44.90
R186 bond (average 4th quarter) 8.35% 8.07%
Prime overdraft rate (average 4th quarter) 9.41% 6.86%
Inflation (CPI annual average) 4.5% 3.3%
Real GDP growth 2021 1.2% 3.2%

Source: Bureau for Economic Research

Every one of the most recent figures tells a story of a weaker economy, even the forecast for lower inflation and a lower deficit on the current account. Inflation is expected to be much lower at 3.3% compared to earlier forecasts of 4.5% because of a collapse in demand for goods and services.

Lower demand impacts on the current account through the value of imports, because SA imports just about everything except for food and wine.


Our weaker economic outlook also led economists to reconsider the exchange rate at the end of the year, as well as the outlook for the prime overdraft rate as the South African Reserve Bank cut interest rates to try to stimulate the economy.

The oil price is expected to be much lower at the end of the year (the competition calls for the average for the last quarter) due to economic problems in the rest of the world. The gold price is expected to be much higher than expected just six months earlier, due to global uncertainty.

Adjusting economic forecasts as time goes by is not unusual. Downward adjustments seem to have become the norm in SA over the last few years – as if economists are rooting for team SA to do well at the start of each year and then having to adjust their expectations to reality a few months into the game.

Digging out the economists’ forecasts at the beginning of 2019 and the actual figures at year-end illustrates how the real performance compared to early forecasts for the year.

Forecasts submitted in February 2019 compared to actual figures

Forecast in Feb 2019 Actual 2019
Real GDP growth 2020 1.3% 0.2%
Current account balance -R163.15bn -R153bn
Euro (average 4th quarter) R 15.88 R 15.04
Dollar (average 4th quarter) R 13.78 R 14.64
Gold (average 4th quarter) $1 302 $1 482
Oil (average 4th quarter) $65.35 $62.30
R186 bond (average 4th quarter) 8.77% 8.33%
Prime overdraft rate (average 4th quarter) 10.25% 10.00%
Inflation (CPI annual average) 5.0% 4.1%

Source: Bureau for Economic Research/SA Reserve Bank Quarterly Bulletin March 2020

GDP was much lower than originally expected. One will remember that most institutions, including the SA Reserve Bank, commercial banks and international bodies like the International Monetary Fund and World Bank, have downgraded their economic growth forecasts several times during 2019.

The same can be said about inflation, which was also lower at the end of the year than expected at the beginning of 2019. This lower-than-expected inflation number was also the result of lower economic activity.

Which raises the very important question: How good are the latest forecasts? The figures look already bad. Will the actual figures be even worse?

The latest forecasts submitted by the entrants to the Economist of the Year competition predict quite good economic growth of 3.2% for 2021. But this is off the very low base of the weak 2020 levels, making the number actually rather pathetic.



Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


This article does not address what I view as the key issue, namely a colossal increase in unemployment and the consequential cost of this ie crime, vagrancy, more basic income grants and the destruction of the fiscal base through massively mooted consumption. ( The current account balance evidences this)

So what we have is a dying economy and sadly huge job losses still to come due to UIF TERS ending driving down VAT, Customs and income taxes even further.

Bottom line -we are broke -and worse we are broken. As a country we could not afford the lockdown and combined with the incessant stealing its deflate the ZAR to 250 to the USD (ie print money) or beg the baas at the IMF for cash

The whole world is broke. The whole world is broken and globally, people are depressed. The pharmacies are out of stock on BP and heart medicines.

Your argument is applicable to the whole world!

Thank you for the information.

Are you a Democrat?

ANC shill.

SA continues to lag other Emerging Markets.

What you’re trying to say Reggwat, is that SA is MORE broken than rest of world. Broken’erer….*lol*

See now, this is what (slowly) happens when a country’s labour laws determine that a large portion of population can be paid fairly well while they are woefully ill-equiped for their jobs. It COSTS govt more than it creates wealth. (oh yes, it ‘transfers’ wealth, not creating it)

“The whole world is broke.” Errrr …. actually no. My American friends still spend, spend, spend. The dollars are printed daily by the Fed of course but the Dow and the S&P500 continue to new highs. Billionaires are born every day in China. The DAX moves to new highs.

Yet SA, the country with the most varied and most valuable resources in the world, goes broke.

Explain that. Oh, wait! It’s the political system! Can we do anything about it? Not much, which is why the emigration exodus is gathering speed.

As much as (most of) the Western media (except Fox) may have it in for Mr. D Trump and his Republican party policy, the one economy that is really surviving and developing is the economy of the USA.

Out of all the issues mentioned the largest and most destructive on the SA economy, by far, is that of ANC corruption.


Why the capital letters? Anger management issues?

Please address the issue and provide constructive input.

The original comment did propose an excellent solution to the country’s problems, albeit in a sarcastic manner, which is to get rid of the cancerous regime infesting it. The latter seems to have triggered you.

All kinds of interesting human beings here nowadays.

There is no incentive to government properly, there is only Incentive to pillage the states coffers, nor is there a disincentive to to govern improperly.

We need a law which demotes and bans political parties who are unable to achieved a minimum of 3% real economic growth in areas where they Goverment including national Goverment.

This is only part of the solution.

Ramaphosa’s new dawn…

Tito predicting vat increase and a basket of new taxes next year

But this was all considered by the non-delusional before covid19

How do we compare to other African countries i.e Egypt, Nigeria.

The woes of the first world are well documented (Wall Street Journal eg) and the woes of UK (GDP contracted 30%) USA (unemployment 24%) are worse that SA.

In my opinion, SA recovery post COVID depends on
– government’s ability to deal with corruption;
– Control of SOE be returned to government for management.
The ZONDO commission is a step in the right direction. I hope the government will be ‘strong’ enough to send cadres who committed crimes to jail.

The rest will take care of itself.

P.S The Current account balance for August 2020 is shown as -R68bn (v -R177bn). This is a good number !! Isnt it?

Reggwat, nothing wrong in looking for positives. How will the government deal with corruption when there is no political will? The evidence is all around us. Zuma, still trying his luck, should be in jail.

I see you’ve taken your Happy Pills this morning. Don’t OD.

I think he’s on something stronger than chill pills…

USA Unemployment 24%? That would make 84,000,000 unemployed Americans…

Like all Libtards, he doesn’t let hard facts detract from his Narrative….

…or maybe Reggwat recently acquired a degree in Soviet-style PROPAGANDA, and now tries to apply his studies to MW-comments 😉

@ rfjock Said like a true Trumptard. distorting the facts.Firstly the US unemployment rates is 10% not 24% and secondly learn some economics. You dont apply to % to the total population but only to the portion of the population that can work

Hi, Please note that the figure for the current account in the first table is not the figure for August, but a forecast for 2020. The forecast was made in August.
One argument is that a lower deficit is good, and a surplus better, when we export more and import less. But SA is a net importer (maybe because we export a ton of iron ore for a few dollars and import a ton of BMW at 100 times more).
Lower imports can thus be seen as an indication of a weak local economy.

The ANC are incapable of running even a small municipality efficiently, how on earth do you think they will be able to formulate and implement a plan that will lead to economic growth in South Africa. We do not have the institutional knowledge needed to run a country that has a sewer system or running water and electricity.

The fake news appears.

Tell the Truth or At least done lie about it.

Did your Google browser break or are you use the anc chancellor house proganda app for your facts?

The common man will believe such lies because it an audacious attempt to tell a lie which is so far from the truth that it might actually appear as the due to the common man thinking that no man would dare make huge mistake in telling a lie like that.

Here is my advice stop trying to sound intelligent, it does not work for you.

“Lower demand impacts on the current account through the value of imports, because SA imports just about everything except for food and wine.”

And if Dear Cyril really wants to kick-start the economy, this is where he must start. Along with trashing labour and BBEE restrictions.

“Make Local-Buy Local” should be the policy.

Why do you not address the elephant in the room and the very reason why economic forecasts have dropped off a cliff?

You have heard of Covid 19 and the non-sensical economic kill switch that was flipped? The first time in human history that the healthy were quarantined.

Maybe look at the economic forecasts and provide some context for the change and then offer an opinion on whether or not you think these new more pessimistic forecasts are, either too pessimistic or not?

I think that would have given the article more depth and some better discussion points,

Many commentators appear to take comfort from ‘the fact’ that everywhere else is F@$&d. Which means…things aren’t so bad in SA after all!!

Sorry for you…! The reality is that while every government is in more debt today than they were on 1 January, not every country against which we prefer to compare ourselves has a 50% unemployment’s rate, or a government that has absolutely no interest in the welfare of its people. Oops, sorry. Zimbabwe!. Right now, I wish I was in NZ or Canada or Australia, with relatively low unemployment rates, low debt to GDP levels and an ability to support the unemployed, and those battling through this crisis. Clearly the US is stuffed, but with a Zuma at the helm, what does one expect?

Everybody lately (Lawyers, Doctors, Politicians, Bankers, Economists, Journalists, Hookers, and Taxi Drivers, etc), in the Western world, can only talk about coronavirus, as if it is the only crisis at hand. What is happening in China, India, and Korea?

In the old world order, pre QE, and the Chinese virus, nobody really knew what was going to happen to interest rates that mainly depended on the uncertain trajectory of the economy.
During my financial market career in Corporate FX Treasury (and yes I know certain people get pi$$ed off when I mention it!), I got used to ‘’financial market economists’’ predictions.

Their so-called ‘’black box models’’ and forecasts were blown all over the markets and mainstream media and in the process tried to con people into thinking their forecasts ‘’is possible’’.

They even assigned mathematical probabilities to a plethora of possible events and segments of the financial markets and then to price risk accordingly.

Maybe I have been ‘’around the block’’ too many times and I don’t believe that you can pretend there is a ‘’black box’’ model that you can use to make predictions about the economies around the world.

The real purpose of economics should be to provide insights into what is going on, to get to the bottom of the story and the facts – the numbers and data cannot predict forecasts or probabilities.

Because wall street and jse was portraying a fake picture
to the world and us about the true picture of corporates.
eg white monopoly capital such as steinhoff and bosasa
bribing every politican,prior to that it was price fixing
and collusion….these guys should be deported back to europe just like the gupthas

What a silly article.Of course it bloody well changed. In Feb we did not have any idea of what was still to come – lockdowns, irrational regulations etc etc

Jeez MW

End of comments.



Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.

Follow us: