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S.A’s 3 economic scenarios

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

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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.


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