President Cyril Ramaphosa. In its 2018 second quarter economic prospectus released on Friday, the economic research institute wrote that a more upbeat forecast for private sector fixed investment, a lower inflation profile, accommodative monetary policy and favourable global demand conditions have resulted in them adjusting their forecast for 2018 in particular.
CAPE TOWN - The Bureau for Economic  Research (BER) has forecast  a more upbeat economic outlook  for South Africa in the  next 18 to 24 months, with  real growth domestic product  expectations of 1.9percent this  year increasing marginally to  2percent next year. 

In its 2018 second quarter  economic prospectus released  on Friday, the economic  research institute wrote that  a more upbeat forecast for private  sector fixed investment, a  lower inflation profile, accommodative  monetary policy and  favourable global demand conditions  have resulted in them  adjusting their forecast for 2018  in particular. 

BER noted that  risks to the baseline forecast  were more or less balanced and,  if anything, tilted to the upside. 

With the rand exchange rate  strengthening substantially  early this year, they projected  a mild weakening over the  forecast horizon to an average  of about R12.35 a dollar in the  fourth quarter of next year. 

Headline consumer price  index inflation was expected to   remain relatively stable, averaging  just below 5percent over  the entire forecast horizon. 

Consumer spending was ex pected to benefit from low inflation,  a strong rand exchange  rate and accommodative monetary  policy. Private sector fixed  investment was likely to accelerate  on the back of increased  business confidence and the  improving growth outlook. 

BER economist and author  of the forecast, Harri Kemp,  said the new administration  had made all the right noises  in terms of what was needed to  boost growth, having started off
on a strong footing with some  reform at the big, state-owned  companies. 

“There have been a few  hiccups along the way (think  the land expropriation debate  and the delay around mining  charter negotiations), but with  the team President Cyril Ramaphosa  has assembled and the  apparent willingness to talk  reforms, we might indeed be  on the right track,” Kemp said.

He highlighted that at this  stage they estimated the potential  growth rate of the economy  at about 2 percent, with remaining  structural constraints limiting  the ability of the economy  to grow at a faster rate. 

“We need to tackle some  of the issues raised above to  improve productivity, lift investment  and improve labour market  absorption in order to lift  economic growth closer to the  4 percent to 5 percent mark.”  He added that South Africa  needed to first “tackle the lowhanging  fruit”, which was to  get business and consumer  confidence back on track, with
potential to fuel investment  and spending increase policy  certainty, particularly in the  mining sector, and to sort out  the governance issues in state  owned companies.

- BUSINESS REPORT