The rate of growth of the South African economy was likely to improve from a forecasted 2.8% of 2012 but the magnitude of the growth was unlikely to make a significant dent in the country’s unemployment rate.
This came out of the latest economic outlook issued by Absa yesterday. The Absa expectations were made with an expectation of a modest improvement in global growth during 2013. The global economy is expected to register GDP growth of 3.3% during 2013 from a forecast of 3.1% in 2012.
The statement said inflationary pressures will still persist through high fuel prices and food prices (despite more recent maize and wheat price declines). A breach of the upper end of the 3%-6% target range is expected in the coming months. “With modest growth and inflation only marginally outside of the range for most of this year, the base case remains for flat official interest rates for the duration of 2013”.
Absa said a decline in disposable household income in the United States will contribute to a moderation in growth in the world’s largest economy to 2,1% this year from 2,3% last year.
Craig Pheiffer, General Manager of Absa Asset Management Private Clients, said: “a hard landing in China has been averted and growth of close to 8,0% in 2013 should follow from the current monetary policy and fiscal policy mix.
Absa said after five quarters of contraction, recent data suggests that the Euro area economy has turned the corner. Increased confidence in current policy should at least halt the contraction of the Euro area economy in 2013 although no growth was expected from the region as a whole this year. The recent stimulus package of about ¥10,6 trillion announced by Japanese Prime Minister Shinzo Abe should contribute to higher levels of growth in the Japanese economy than was being expected just a quarter ago.”