In a recent Policy Paper on forecasting economic downturns in South Africa using leading indicators and machine learning, Jurgens Fourie and I showed that confidence indicators such as the ABSA/BER PMI, BER Business/Consumer Confidence or SARB’s coincident/leading indicators are only weakly contemporaneously correlated with business cycle phases in South Africa, and not highly correlated with GDP growth outcomes. Today’s post presents our current activity and leading activity indicators that consider a large dataset of possible indicators and are optimised to act as coincident and leading indicators. The shaded downturns are based on Codera’s business cycle estimates as detailed in our policy brief. We are currently refining our indicators and business cycle and will be publishing updates to forecast subscribers.
