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Budget Comment

Prolonged fiscal slippage collides with COVID-19 crisis, causing severe damage to public finances. The adjusted budget presents a dramatic deterioration from the outlook in February 2020, not to mention the 2019 budget. Even so, this is still somewhat better than our latest forecast for the debt outlook which assumed less constraint on spending and higher debt-service costs.

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Recent Releases



Forecast Update July 2020

While the overall GDP picture is unchanged, we have revised the outlook for key underlying GDP components, as well as selected other macro variables.

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After rising from 10 to 24 between 2019Q1 and 2020Q1, the FNB/BER Civil Confidence Index fell to an all-time low of 5 in 2020Q2. Underlying the fall in confidence was a steep drop in activity.

The Absa PMI for June showed that conditions continued to improve in the South African manufacturing sector. This is after most of the sector came to a near standstill during the nationwide Level 5 lockdown in April and only partially returned to normal production levels in May. The BUSINESS ACTIVITY INDEX (shown here) rose further to above 60 index points in June.

COVID-19 has drastically changed the already-weak economic landscape. The RMB/BER Business Confidence Index (BCI) fell to merely five points, the lowest level ever recorded since the BER first began conducting its business confidence survey in 1975.

The FNB/BER Consumer Confidence Index (CCI) declined by a further 2 points. The time-to-buy sub-index plunged to a 33-year low. High-income earners’ confidence dropped to a 20-year low. The low confidence of the high-income group does not bode well for retail sales in general and durables goods in particular. Non-durable goods will continue to benefit from the stable confidence of low- and middle-income earners.