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CONSENSUS VIEW ON THE RAND FOR 2003

The consensus view on the rand for 2003 is taken from the Sake survey amongst 30 local economists. The survey is done monthly for 11 variables in the economy. One of the variables is the average rand/$ exchange rate in the fourth quarter of 2003.

The table shows the forecasted values from January to October for the rand per dollar, economic growth as well as CPIX inflation.

The last column in the table shows the actual exchange as of the 20th of the month and is the exchange at the time when the forecast was made for the month. The forecast is the average value of the rand per dollar in the 4th quarter of 2003.

In January the view was that the rand would weaken throughout the year as the forecasted value was in fact weaker than the actual value of the rand when the forecast was made. This was the view for each of the months. As a matter of fact a naive forecast of the rand where the actual value of the rand on the 20th was taken as the forecasted value for the 4th quarter would have performed much better than the consensus forecast.

Also interesting to note is the downward adjustment in the forecasted value of economic growth as well as inflation since January. The South African economy is an open economy and the stronger than expected performance of the rand lead to better expected inflation as well as weaker than expected economic growth.

As far as 2003 goes the consensus forecasts on most of the key variables were wrong because the rand performed much better than expected. The last row in the table shows the likely 2003 outcome for the variables. The performance of the rand has caused a lot of confusion in the economy.

Last updated on December 17, 2003.