S.Africa to grow at 2.1% yy this year

The South African economy remains weak, with prolonged strikes having had a very negative impact on both private consumption and investments. 

Indeed, estimates from the South African Reserve Bank (SARB) state that the strike has subtracted at leastone percentage point from GDP growth in 2014. 

The large current account deficit is still large (6% of GDP in Q3) and makes the South African economy vulnerable to external shocks.

Danske Bank notes its forecasts as follows:

• For 2015 and 2016, we forecast GDP growth of 2.1% y/y and 2.3% y/y, respectively. This is slightly below the forecast from the SARB, which is for GDP growth of 2.2 % y/y this year, increasing to 2.4 % y/y in 2015.
  
  
• Inflation in January decreased to 4.4% y/y, from 5.3% y/y in December. This implies that the inflation rate has been declining since May 2014, due primarily to the falling oil price (oil is the No. 1 imported good in South Africa). Our inflation models indicate that inflation should be around 4.0% in 2015.