2012-11-15 20:08:52 - South Africa Business Forecast Report Q1 2013 - a new country guide report on companiesandmarkets.com
We see the South African economy continuing its uneven recovery over the medium term, with real GDP growth forecast expected to slow to 2.5% in 2012 from an estimated 3.1% in 2011, and subsequently rebound to a still-tepid 3.3% in 2013. Although the consumer sector is relatively robust, the supply side is lagging behind and there are widespread concerns that the recovery is not sufficiently broad-based. A key downside risk stems from industrial unrest in the mining sector.
We forecast that South Africa´s repo rate will be kept steady at 5.00% over the medium term. That said, there is a risk that rates will be cut. Growth is slowing, inflation is under control and commentary from the central bank is increasingly
dovish. On balance, however, we expect the South African Reserve Bank to ´hold fire´ in order to save its ammunition in case the eurozone crisis accelerates.
Policy uncertainty is relatively high owing to question marks over whether President Jacob Zuma will secure another term in office.
Major Forecast Changes
We have revised down our forecast for real GDP growth in 2012 to 2.5% from 2.7% previously, owing to a weaker outlook for growth in key trading partners including China and the eurozone.
Key Risks To Outlook
A sustained bout of global risk aversion with an attendant sharp outflow of portfolio funds. This would threaten South Africa´s precarious balance of payments.
A sudden uptick in domestic political risk, perhaps surrounding the ANC elections in December 2012.
A sustained period of high oil prices would exacerbate the alreadysizeable current account deficit.
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