Today’s post shows that confidence indicators are correlated with GDP growth outcomes in South Africa, although SARB’s coincident and leading indicators are not. This is consistent with a more formal demonstration in an earlier post where I showed neither the leading indicator or coincident indicator produce ‘good’ forecasts of GDP. We will update this analysis for a larger suite of indicators following the next GDP outturn.
Another indicator worth mentioning is BankServAfrica’s banking activity index (BETI) as it is available with a short lead time, making it a potentially useful source of information with which to nowcast GDP. It is not publicly available for the full sample in the chart, but its contemporaneous correlation to GDP is around 0.6, consistent with our previous post showing a weakening correlation between the BETI and same quarter GDP outcomes in the wake of the pandemic. For T+1 (one-quarter ahead) its correlation is 0.3 and 0.1 for T+2.
