Today’s post by Lisa Martin plots a summary of historical National Treasury nominal GDP forecast errors. The chart shows that Treasury, like other institutions, Treasury tended to over-estimate future nominal GDP growth after 2010.
The National Treasury frequently over-estimated future nominal GDP growth after 2010. For example, base effects from the COVID-19 pandemic were temporarily associated with under-estimates of GDP
growth in the MTEF projections for the 2021 Budget Review. However, as we showed earlier, the National Treasury, like other institutions, was consistently surprised by the structural slowdown in economic growth that characterized the period after the global financial crisis. This is despite the progressive lowering of the National Treasury’s GDP growth forecasts in Budget Reviews over this period.
Footnote
In the chart above, the T-1 label shows forecast errors for in-year ‘revised estimates’. The labels T, T+1, T+2 compare outcomes from the latest Budget Review (the 2026 edition) to the three Medium Term Expenditure Forecast years published in earlier Budget Reviews. For example, the
outcome published for 2024/25 in the 2026 BR is compared with
previous estimates/forecasts to create the ‘T+2’ (grey) bar at 2022/23, ‘T+1’ (red) bar at 2023/24, ‘T’ (light blue) bar at 2024/25 and the ‘T-1’ (dark blue) bar at 2025/26.
