Our model predicts a slight moderation to 1.5% in 2019 due to tax effects, but reaching 2.0% in 2020. The Monetary Policy Committee’s (MPC) assessment is that the risks to these forecasts are on the upside. The improved outlook is based, together with upward revisions to past economic data, on the strong improvement in confidence.
Recent research conducted at the SARB3 suggests that the collapse in levels of confidence in the past few years had shaved off around one percentage point from growth in both 2015 and 2016. In a similar vein, the National Treasury estimates that the rebound in confidence could add 0.4 percentage points to potential output.