Reuters SA Survey of Economists (March 2009)
The March edition of the Reuters South African Survey of Economists has just been published. (The Reuters Econometer is a measure of economic sentiment drawn from a monthly poll of forecasts by leading economists in South Africa and abroad and presented in the form an index). The weightings used in the index are: GDP growth – 25%; CPIX inflation – 20%; Producer Price Inflation – 5%; Prime Interest Rate – 20%; 10-year bond yield – 5%; Rand-Dollar Depreciation – 25%.
The Econometer edged up to 263,79 in March after falling in both January and February of this year, pointing to better conditions towards the end of 2009 but the growth outlook has deteriorated further as the economy teeters on the brink of recession. In response to the weakening economic conditions and slowing inflation, the central bank has been cutting interest rates and it is expected that we will see more of the same, at least until mid-year. The economy has been battered due to the global downturn, highlighted by falling manufacturing output and declining mining production. It is forecasted that the economy will contract by 0,28% in 2009 and growth may only be seen recovering to 2,68% in 2010. Official data shows the economy has shrunk by 1,8% in Q4 of 2008, the first quarterly contraction in a decade. Consumer inflation jumped to 8,6% y/y in February, while Producer inflation slowed to 7,3%. Forecast show CPI growth averaging 6,66% in 2009 and PPI should brake 4,22% this year. Economists are less bearish on the rand and see it end the year at 9,61 against the dollar compared to 9,98 in February’s survey.
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Source: Sasfin, April 2009.
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