The July edition of the Reuters South African Survey of Economists has just been published. (The Reuters Econometer is a measure of economic sentiment drawn from a monthly poll of forecasts by leading economists in South Africa and abroad and presented in the form an index). The weightings used in the index are: GDP growth – 25%; CPIX inflation – 20%; Producer Price Inflation – 5%; Prime Interest Rate – 20%; 10-year bond yield – 5%; Rand-Dollar Depreciation – 25%.


After  falling  in  June,  the  July  Econometer  edged  up  to  248,17  on  the  back  of  expectation  for  a  mild  economic recovery  next  year  as  w ell  as  low er  inflation.  The  economy  is  still  expected  to  contract  this  year  by  an  average  -1,8%,  how ever sentiment  has  improved  for  a  better  recovery  in  2010  and  2011.  Contributing  to  the  improved  outlook  is  the   impact  of  the  Soccer World Cup and the recovery in consumer demand due to the effects of the interest rates cuts. Inflation is still expected to fall within the  target  band  by  Q2  2010.  CPI  how ever,  is  seen  averaging  7,26%  this  year  compared  to  7,33%  in  the  June  survey.  Weak  local demand and extra capacity has contributed to the low er inflation outlook. Although the rand is a bit of an unknow n, the rand is seen strengthening this year to an average R8,43/$, compared to R8,53/$ expected in the June survey

The “August” survey w ill be published 3 September 2009.

Please click the thumbnail below for the full report.


Source: Sasfin, July 2009.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.