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Johannesburg - Despite Eskom's tariff increases in the past year, the economy was able to grow more than the 2.3% predicted by Treasury.
The consensus forecast by the 35 economists participating in this year's FinMedia24's Economist of the Year competition is that the economy will grow 2.69% in 2010.
Two weeks ago Minister of Finance Pravin Gordhan said that Treasury's growth forecast of 2.3% was conservative and that it took into account electricity hikes of 35% a year over the next three years.
The National Energy Regulator of South Africa (Nersa) last week granted Eskom increases of 24.8%, 25.8% and 25.9% for the three years.
Among the 35 economists Chris Harmse, an economist at Dynamic Wealth, is the only one expecting growth to be under 2%. PricewaterhouseCoopers economic adviser Dr Roelof Botha expects a sturdy 4.5%.
According to the economists' consensus forecast, inflation linked to the consumer price index (CPI), which could also be pushed up by dearer electricity, will average 5.86% this year. This is just within the Reserve Bank's target band of 3% to 6%.
Unisa economist Fanie Joubert is the most optimistic of the economists and expects inflation of just on 4.5%.
But many of the economists expect CPI inflation to be above 6% this year.
Forecasts for the rand
Economists Rian le Roux from Old Mutual and Richard Downing from Econdow expect the highest inflation, forecasting it at 7.5%.
After the strengthening of the rand last year owing to a weak dollar and strong investment inflows into developing markets, economists predicted that the picture this year would look very different when the dollar lifted its head.
But the problems recently becoming evident in some countries in the euro region could invigorate our currency.
The economists' consensus forecast is that the rand will trade at R11.05 to the euro in the last quarter of the year, considerably stronger than the R11.66 at which it traded on Friday.
Le Roux and Joubert even expect the rand to strengthen to R10.50 and R10, respectively, against the euro.
With Statistics South Africa announcing last week that the South African economy had grown 3.2% in the fourth quarter of last year, and Nersa granting Eskom a 25%-odd tariff increase, many economists said there was little opportunity of a further interest-rate cut this year.
They expect the prime lending rate to be 10.44% in the last quarter of this year, just slightly less than the current 10.5%. Several of the participants expect a half-percentage-point increase between now and the fourth quarter.
Joubert and Econometrix economist Tony Twine anticipate bigger rises and respectively say the prime lending rate could be 11.4% and 11.5% in the final quarter.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.