OECD revises 2019 and 2020 economic outlook to 3.3 pct and 3.4 pct respectively, says RMB Global Markets

The Organization for Economic Co-Operation & Development (OECD) revised its 2019 and 2020 economic outlook by 0.2ppt and 0.1ppt, to 3.3 percent and 3.4 percent, owing to revisions in policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence, according to the latest research report from RMB Global Markets.

The organization expects South Africa’s growth to average 1.7 percent and 2.0 percent in 2019 and 2020. This is more or less in line with the SARB’s forecasts, but slightly lower than RMB’s estimates of 1.3 percent and 1.9 percent for 2019 and 2020.

Slowing growth, electricity disruptions and lacklustre domestic demand remain key risks for the SA economy.

Further, SACCI Business Confidence Index has continued to trend lower since September 2018, declining to 93.4 points in February from 95.1 the month before — weighed down by policy and political uncertainty ahead of the national elections.

If investors continue to doubt President Ramaphosa’s ability to deliver much-needed structural reforms and growth-enhancing policies, markets are unlikely to see a significant pickup in investment, which could see growth remaining subdued for longer, the report added.

Meanwhile, EM currencies were also on the back foot as the Bloomberg Dollar Index continued to gain on expectations that other central banks are likely to keep interest rates unchanged for longer. The rand closed 0.7 percent weaker against the US dollar, euro and pound.