South Africa: Gold at the end of the rainbow?
Consenus sees economic growth gaining traction in South Africa next year amid broad-based improvements. Fiscal challenges, however, remain high and could worsen if Eskom needs yet more funds. This accounts for the significant spread among our panelists' projections
Bar their recent triumph against old foes England in Japan’s rugby world cup, there has been little to cheer about in South Africa this year.
After dodging recession in the second quarter, the economy undershot market expectations and contracted in the third quarter as a series of breakdowns in Eskom’s coal power plants triggered the return of rolling blackouts. Moreover, the economy likely remains in the doldrums in the fourth quarter given the rolling blackouts reached an unprecedented level in early December after more than a quarter of the country’s generating capacity broke down. As a result, large platinum and gold miners were forced to halt operations on 9 December, while small business owners were forced to use expensive generators, both of which will have hampered year-end economic activity.
Fitch Ratings, Moody’s and S&P Global Ratings all have a negative outlook on the country’s long-term foreign currency ratings. Nevertheless, as highlighted by the chart below, Consensus sees growth gaining traction next year amid broad-based improvements. Particularly, household spending is seen rising more rapidly; fixed investment is set to rebound amid improved investor sentiment and favorable monetary conditions; while a weaker rand should boost exports. Fiscal challenges, however, remain high and could worsen if Eskom needs yet more funds. This accounts for the significant spread among our panelists’ projections, with the most pessimistic forecast projecting the economy to flatline next year and the most optimistic forecast projecting economic growth accelerating to 1.8%.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. FocusEconomics S.L.U. takes no responsibility for the contents of third party internet websites.
Author: William O'Connell, Editor
Date: December 20, 2019
TagsBitcoin Sub-Saharan Africa Unemployment rate Copper MENA Asean Base Metals Commodities Spain Asian Financial Crisis OPEC IMF Greece precious metals Italy Consensus Forecast Costa Rica; GDP; Budget United States Brazil public debt Euro Area G7 Israel TPS Nordic Economies interview Eastern Europe Banking Sector Forex Emerging Markets Exchange Rate United Kingdom Russia scotiabank Asia Infographic Africa Economic Crisis Housing Market Japan Vietnam Central America Brexit Lagarde Ukraine Commodities Economists Energy Commodities GDP Trade Agricultural Commodities Cannabis Turkey TPP Budget deficit Major Economies Nigeria Political Risk India economic growth Draghi Base Metals Australia Eurozone European Union South Africa Inflation USA Argentina Company News Economic Debt oil prices election chile Latin America Precious Metals Commodities Healthcare France UK Canada CIS Countries Canadian Economy Tunisia Resource Curse Economic Growth (GDP) Palladium Mexico Gold Investment Colombia Exports Portugal Venezuela Iran Oil Cryptocurrency Germany China
CIS economies saw inflation rise last year, especially in Russia and Ukraine, but forecasters project price pressur… https://t.co/2C7fkefxKc
15 hours ago
Merry Christmas & a Happy New Year from everyone at FocusEconomics! https://t.co/hvhP9PTvbR
3 weeks ago
1 month ago
What are the key issues facing the global economy in 2021? Download our latest special report, Focus 2021, for key… https://t.co/1JR8SvhA4X
1 month ago
Could stronger U.S. inflationary pressures and a weaker USD add upward price pressure on gold? Take a look at the… https://t.co/EHaep7mL3K
1 month ago