S.A’s 3 economic scenarios

PUBLISHED: Wed, 26 Oct 2016 12:38:18 GMT

While South Africa’s 2016 Medium Term Budget Policy Statement (MTBPS) made for sober reading it also offered the possibility of a brighter future.

The statement forecasts three potential long-term risk scenarios:

  • The first envisages a recession in 2017/18, followed by a period of protracted lower growth.
  • The second, anticipates marginally lower growth than the baseline forecast, see chart.
  • The third scenario, expects exports to respond strongly to the weaker exchange rate, and electricity supply to improve, resulting in faster economic recovery.

The MTBPS warns that should we encounter the first two scenarios the country would require higher taxes and reduced spending to stabilise debt; whilst if we are fortunate enough to fall into the third scenario debt stabilisation would be accelerated.

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.