{"id":279637,"date":"2018-10-24T14:37:50","date_gmt":"2018-10-24T12:37:50","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=279637"},"modified":"2018-10-24T14:39:17","modified_gmt":"2018-10-24T12:39:17","slug":"3-possible-scenarios-for-the-south-african-economy-treasury","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/279637\/3-possible-scenarios-for-the-south-african-economy-treasury\/","title":{"rendered":"3 possible scenarios for the South African economy &#8211; Treasury"},"content":{"rendered":"<p>South Africa\u2019s gross domestic product could contract in 2019 and 2020 if contagion from a developing-economy debt and currency crisis spreads, the National Treasury said.<\/p>\n<p>That\u2019s the worst-case scenario of three possible outcomes the Treasury outlined in its mid-term budget Wednesday. On the other end of the scale, higher confidence could boost economic growth and the rand may rally.<\/p>\n<p><strong>Below are the highlights from each of the three scenarios:<\/strong><\/p>\n<hr \/>\n<p><strong>Scenario A: sluggish domestic growth<\/strong><\/p>\n<ul>\n<li>Global growth is 0.5 percentage point lower than forecast.<\/li>\n<li>Commodity prices are lower, but oil prices stay elevated.<\/li>\n<li>Trade tensions increase and monetary policy tightens in developed economies.<\/li>\n<li>South African interest rates increase to offset inflationary pressures from a weaker rand and bond yields rise, causing higher borrowing costs.<\/li>\n<li>South African GDP grows by 0.9% in 2019.<\/li>\n<li>Gross debt-to-GDP ratio climbs to 68 percent by 2026-27.<\/li>\n<li>Debt-service costs increase to 18 percent of budget revenue by 2026-27.<\/li>\n<li>Primary budget deficit peaks at 1.4 percent in 2020-21.<\/li>\n<\/ul>\n<hr \/>\n<p><strong>Scenario B: contagion from EM debt and currency crisis<\/strong><\/p>\n<ul>\n<li>Global growth is 1 percentage point lower than forecast.<\/li>\n<li>Commodity prices are 15% below expectations.<\/li>\n<li>Global financial conditions are tighter and risk aversion increase.<\/li>\n<li>South African exports, consumption and investment drop and rand depreciates.<\/li>\n<li>South African GDP contracts in 2019 and 2020.<\/li>\n<li>Inflation breaches 7% and long-term bond yields spike by more than 2 percentage points.<\/li>\n<li>Gross debt-to-GDP ratio grows to 80% by 2026-27.<\/li>\n<li>Debt-service costs advance to 24% of budget revenue by 2026-27.<\/li>\n<li>Primary budget deficit increases to 3.6% in medium term.<\/li>\n<\/ul>\n<hr \/>\n<p><strong>Scenario C: stronger domestic growth<\/strong><\/p>\n<ul>\n<li>Domestic confidence continues to improve as interventions such as allocating broadband spectrum in a way that reduces costs take hold.<\/li>\n<li>State interventions ease risks that government-owned companies pose to the fiscal framework.<\/li>\n<li>Bond yields are almost 1 percentage point lower and the rand strengthens.<\/li>\n<li>GDP expansion reaches 3.2% in 2024-25.<\/li>\n<li>State achieves a primary surplus of 0.5% by 2021-22.<\/li>\n<li>Debt stabilizes at 55.4% of GDP in 2021-22.<\/li>\n<\/ul>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/government\/279611\/governments-plans-to-boost-the-south-african-economy\/\" target=\"_blank\" rel=\"noopener\">Government\u2019s plans to boost the South African economy<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>South Africa\u2019s gross domestic product could contract in 2019 and 2020 if contagion from a developing-economy debt and currency crisis spreads, the National Treasury said.<\/p>\n","protected":false},"author":59,"featured_media":118672,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[26],"class_list":["post-279637","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/279637","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=279637"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/279637\/revisions"}],"predecessor-version":[{"id":279647,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/279637\/revisions\/279647"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/118672"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=279637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=279637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=279637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}