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.
Date: December 20, 2019
TagsNordic Economies scotiabank Resource Curse Nigeria Unemployment rate Investment Major Economies Portugal Eastern Europe Germany MENA Banking Sector OPEC Company News Spain Asia Exchange Rate Agricultural Commodities Eurozone Italy Infographic Australia Russia Palladium Lagarde Greece United States TPP Asean Costa Rica; GDP; Budget Inflation chile Exports Israel Oil Precious Metals Commodities Trade Ukraine Economic Debt United Kingdom Political Risk oil prices Bitcoin Economic Crisis Tunisia precious metals economic growth Brazil Argentina GDP Latin America Base Metals Commodities China Energy Commodities Africa Sub-Saharan Africa Economists Canadian Economy Gold CIS Countries USA Colombia UK Asian Financial Crisis Emerging Markets Venezuela South Africa Consensus Forecast TPS Japan public debt Central America Healthcare Copper Commodities European Union election Mexico Draghi Iran Canada Cryptocurrency Base Metals Budget deficit G7 France IMF India Brexit interview Housing Market Economic Growth (GDP) Vietnam Euro Area Turkey Cannabis Forex
Following two global crises in quick succession, public debt-to-GDP ratios in many countries are now at multi-decad… https://t.co/WYmjrbycxF
15 hours ago
Base metals posted the weakest increase in prices since April 2020 in June, following China's announcement that it… https://t.co/NW1R30219S
1 day ago
After years of chronic downturn, the Venezuelan economy appears set to shrink at a significantly softer rate this y… https://t.co/3rUhH4VTqO
4 days ago
Unemployment in Central America and the Caribbean soared last year as Covid-19 restrictions bit hard and vital tour… https://t.co/sTX41IBUG1
5 days ago
The Colombian peso weakened notably against the U.S. dollar in early July, weighed on by social unrest and ongoing… https://t.co/PnDn2BKr54
6 days ago