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Economic Prospects 2021Q3

Key downside risks to domestic GDP growth have materialised, while the KZN turmoil poses new risks. These concerns are juxtaposed against better-than-expected SA activity data in the first half of the year. Put together, the SA real GDP forecast for 2021 and 2022 is unchanged at 3.9% and 2.5%.

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BER Virtual Briefing 25 August

Macro clients can now register for our BER Virtual Briefing that will take place on 25 August 2021. The topic of the briefing is 'Tracking the recovery: Shocks, politics and reform'.

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The FNB/BER Civil Confidence Index rose steadily between 2020Q3 and 2021Q1. This quarter, however, the index fell to 13, from 21 in 2021Q1. While respondents were somewhat disappointed with the level of activity, the extent to which confidence declined was not entirely supported by the underlying indicators.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) plunged in July. This signals that the output recovery in the manufacturing sector was set back notably at the start of the third quarter. From an elevated 57.4 in June, the headline PMI suffered a record single month decline of almost 14 points, dropping to 43.5 in July. This is well below the neutral 50 level.

After declining by five points in the first quarter, the RMB/BER BCI jumped by 15 to 50 in the second quarter. Confidence rebounded especially sharply in the manufacturing, retail trade and motor trade sectors. By contrast, sentiment among building contractors and the wholesale trade sector improved only marginally. While the improvement in sentiment is no doubt encouraging, uncertainties remain.

After recovering further from -12 to -9 index points during the first quarter of 2021, the FNB/BER Consumer Confidence Index (CCI) backpedalled to -13 in the second quarter of 2021. The latest reading remains well below the average CCI reading (of +2 since 1994) and denotes very depressed consumer confidence levels, albeit less negative compared to the extraordinarily pessimistic readings of -33 and -23 recorded during the second and third quarters of 2020 (when severe pandemic-induced economic restrictions were implemented).