Simple statistical filters for estimating the output gap (a measure of economic slack) suggest that it remains in positive territory. Our filters suggest that potential growth remains below 1%. The most recently published SARB assumptions (from the March 2024 MPC) have potential growth at 0.1% for 2023 and 1% in 2024. Like the SARB, the IMF has progressively lowered its projections of South African potential growth over time (here backed out in the chart using their real time output gap and real GDP estimates). The IMF’s implied estimates have been lower than SARB’s since 2021, but their projections imply a slightly higher profile of potential growth over the medium-term.
Footnote
You can read more about output gap estimation using our suite in this previous post. For an assessment of the real-time output gap / potential in SA, see this earlier post.
Note that the IMF and SARB estimates are based on slightly different definitions, with the SARB estimate reflecting a medium term concept, whereas the IMF estimate presented here is their implied estimate of the underlying trend growth of the economy at a particular point in time. The annual real GDP growth rates from the WEO are identical at first decimal to the rates from the Article IV 2023, suggesting the use of the WEO real GDP data will not meaningfully affect the accuracy of the implied potential growth estimates I have backed out.
