Economists more upbeat than govt

Johannesburg - The South African economy could grow by more than 2% next year, and inflation be under 6%.

The consensus view of the 33 participants in FinMedia24?s Economist of the Year competition is that gross domestic product (GDP) will expand by 2.45% next year.

This is the same as September's consensus view, but considerably less than February's 3.33%.

The economists' growth outlooks are significantly more optimistic than that published in Tuesday's Medium-Term Budget framework, which was that the economy would grow by 1.5% in 2010. Dr Roelof Botha, economic adviser to PricewaterhouseCoopers, is the most optimistic of the group and predicts that the economy will improve by 4.5%.

But Dave Mohr from Citadel expects next year's growth to be only 1%.

The economists' consensus view on inflation for 2010 - 5.94% - is also more optimistic than that of the Treasury, which expects it to be 6.3% for the year.

But these forecasts were made before Eskom's application for further hikes in electricity tariffs. The proposed hikes could change many of the assumptions on growth and inflation for the year to come.

The economists predict that this year's economy will contract 1.69%. In February they were forecasting a 1.14% improvement. The Treasury expects the economy to shrink 1.9% for 2009.

It seems that the economists do not expect the past few days' weakening of the rand to reverse in the next two months. Their consensus view for the average rand/dollar exchange rate for the last quarter of 2009 is R7.77.

On Wednesday the rand was trading at about R7.77 after having been below R7.50 for much of October.

- Sake24.com

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