There are some legendary quips about economists and their predictions, probably the most notable being that of English playwright George Bernard Shaw, who remarked: “If all economists were laid end to end, they wouldn’t reach a conclusion.”
Influential US economist John Kenneth Galbraith, whose concise, elegant analysis of the 1929 Wall Street crash, “The Great Crash 1929”, is required reading for anyone interested in finance, was wryly denigrating of his own kind. “Economics is extremely useful as a form of employment for economists,” he is quoted as saying, and “Economists, when they seek to be profound, often succeed only in being wrong.”
Businesspeople and investors look to economists to guide them on risks and opportunities in the marketplace. By analysing and assessing the influences of a broad spectrum of known factors on economies and markets, and giving informed opinions based on probabilities and trends, economists hold an important place in today’s money-driven, forward-looking world. However, as Shaw observed, and as we see below, those opinions can be diverse and often contradictory.
The Bureau of Market Research (BMR) at the University of South Africa holds an annual Economist of the Year competition. As a precursor to this year’s event, the bureau conducted an opinion poll among South Africa’s top 36 economists on how our country and the world will fare in the first half of 2025.
Economic progress or a slow-down?
In the BMR’s report on the results of the poll, over half (56%) of the economists believed there would be little or no positive or negative change globally in the first six months of the year. Of the remainder, a larger proportion felt things would worsen (28% of the total), leaving only 16% hopeful that the global economy would improve.
They were far more optimistic about the local economy: almost two-thirds (64%) believed things would improve, 28% said there would be little to no change, and only 8% said things would get worse.
Outlook for SA consumers
Key to the economists’ optimism about South Africa is that they expect conditions to improve for consumers, and key to that improvement is the expectation that both inflation and interest rates will decrease.
While 84% thought inflation would remain steady or decrease in the first half of 2025, they all agreed that interest rate cuts by the SA Reserve Bank would continue, disagreeing only on the speed and degree of those cuts.
Over half (56%) anticipated an improvement of household finances, while only 8% expected a deterioration. However, they are not quite so positive on job creation, with less than half (40%) expecting employment to rise.
The BMR report lists several additional positive outcomes anticipated generally by the economists:
• The electricity supply will be more stable with no or limited loadshedding.
• Economic growth will be higher.
• Consumer, business and investor confidence will improve.
• The Government of National Unity will secure positive structural reforms and closer collaboration between political parties, and there will be improved political stability.
• Closer collaboration between business and government to improve infrastructure.
• Upgraded credit ratings by rating agencies from a “stable” to “positive” outlook.
Advice for consumers
The economists suggested that, given the improved economic circumstances, households should reduce their debt, increase savings and limit excessive consumption. “Consumers must take advantage of the decrease in inflation and the lower interest rates expected for 2025 to address high household debt,” the BMR report says.
