Economic Outlook May 2021

Incoming data for 2021Q1 indicates that the beleaguered SA economy showed some resilience through the more infectious local COVID-19 second wave in December 2020 and January 2021. Indeed, while remaining mindful of downside risks to the SA GDP recovery, we made a further minor upward revision to the forecast for both 2021 and 2022. Beyond the initial 2021, and to a lesser extent the projected 2022 bounceback in GDP, average real GDP growth of 2% is forecast between 2023-26. Note, this report is exclusive to BER Macro Service clients.

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The BER & SARB wish to announce the commencement of recruitment for the 2022 economist internship programme. The successful candidates will be employed by the SARB, but will spend their first year at the BER.

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After rising to 16 in 2021Q1, the FNB/BER Civil Confidence Index gained a further five points to register a level of 21 in 2021Q1. Higher activity this quarter boosted sentiment.

Following three consecutive months of improvement, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined slightly to 56.2 index points in April from 57.4 in March. Despite the modest pullback, the index is now about 2.5 points above the average recorded in the first quarter of the year and about 26 points above the April 2020 reading recorded during the strictest phase of South Africa’s lockdown.

The RMB/BER BCI declined from 40 to 35 in the first quarter of 2021. This means close to seven out of ten senior executives expressed dissatisfaction with prevailing business conditions, up from six previously. Retail saw the biggest decline, followed by manufacturing and new vehicle dealers. Sentiment among building contractors and wholesale traders deteriorated slightly. Such underlying dynamics are not reflective of a robust economic upswing.

The FNB/BER Consumer Confidence Index (CCI) increased by another 3 index points to a level of -9 in the first quarter of 2021. The recovery to -9 index points brings the CCI back in line with the reading recorded in March 2020, just before South Africa entered its first strict nationwide lockdown. Although it is heartening that the CCI has now recovered most of its COVID-19-induced losses, consumer confidence in general remains depressed - the latest reading of -9 is still well below the average CCI reading of +2 since 1994.