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South Africa Reserve Bank repo rate forecast report May 2021

100% of economists say that the South African Reserve Bank will hold the rate.

Key findings

  • The entire panel of 21 economists believe that the MPC will hold the repo rate at the May meeting
  • 100% think the rate will hold, 14% think the Bank should cut the repo rate
  • Around a quarter (23.81%) think that we’ll see the Bank lift its repo rate this year

Meet our panel

PanellistsPanellistsPanellists
Carpe Diem Research Services, Independent Economist, Elize KrugerEFConsult, Lead Economist, Frank BlackmoreCiti, Economist, Gina Schoeman
Efficient Group, Chief Economist, Dawie RoodtInvestec.co.za, Chief Economist, Annabel BishopUniversity of Pretoria, Dean, Elsabe Loots
UNISA, Lecturer (Economist), Mzwanele NtshwantiBNP Paribas, Chief Economist, Jeff SchultzJawitz Properties, CEO, Herschel Jawitz
Antswisa Transaction Advisory Services, CEO and Chief Economist, Miyelani MkhabelaUniversity of the Free State Department of Economics and Finance, Senior Researcher, Dr Johan CoetzeeXesibe Holdings, Managing Director, Ayabonga Cawe
North-West University School of Economics, Professor, Waldo KrugellNedbank, Analyst, Reezwana SumadRMB, Economist, Siobhan Redford
University of Cape Town, Associate Professor, Sean GosselAlexander Forbes, Chief Economist, Isaah MhlangaOld Mutual, Chief Economist, Johann Els
Wits Business School, Professor, Jannie RossouwIntellidex, Head of Research, Peter Attard MontaltoBER, Chief Economist, Hugo Pienaar

The May repo rate decision

All 21 panellists on Finder’s South African Reserve Bank (SARB) repo rate forecast report believe that the SARB’s Monetary Policy Committee (MPC) will hold the rate when it meets in May 2021.

However, while all panellists think that the rate will remain the same, 14% believe that the rate ought to be cut by an average of 42 basis points.

Both managing director for Xesibe Holdings Ayabonga Cawe and lecturer at the University of South Africa Mzwanele Ntshwanti think that the MPC should cut its rate by 50 basis points at the next meeting. Ntshwanti argues that “decreasing the repo by 50 basis points will give room to households to spend and firms to aggressively invest in the economy for recovery.”

Associate professor at the University of Cape Town Sean Gossel agrees with this sentiment, though he believes that a reduction of 25 basis points would be sufficient.

“To support South Africa’s weak recovery and to provide some relief to over-indebted consumers and stimulate business activities. International capital flows are sufficiently buoyant, so the slightly lower yields won’t stimulate excessive capital outflows,” Gossel said.

Independent economist for Carpe Diem Research Services Elize Kruger is in the “hold” camp, believing that the current rate needs to remain in place to allow the economy to recover.

“Inflation remains well under control in South Africa, while the economy still struggles to gain momentum. At the current pace of expansion, the local economy will take some years to get back to pre-COVID production levels, the local economy needs all the support it can get.”

Chief economist at BNP Paribas Jeff Schultz concurs, believing that both the rate will and should hold at the next SARB meeting and saying that the MPC will opt for prudence and set a steady course for economic recovery:

“We expect the SARB MPC to unanimously hold the repo rate at 3.50% next. While the inflation outlook looks to be well-contained, a number of uncertainties persist around the strength of the economic recovery, risk of a third wave of COVID-19 infections and the impact of higher global commodity prices on second-round effects to CPI. As monetary policy is already very accommodative, we believe that the SARB will continue to opt for prudence and hold rates steady in May.”

The only way is up

While 100% of the economists believe that the SARB rate will hold in May and 14% think that the rate should be cut, when asked what direction they believe the MPC will move the rate, our panel was once again united, with 100% believing that the next rate move by the Bank will be up.

However, just when the panel thinks this will happen has economists divided. Close to a quarter (23.81%) believe that we will see the next rate hike in November of this year. A plurality of panellists (47.62%) think that the next move will come in the first half of 2022, with an additional 23.81% saying it’ll happen in the second half of 2022. Just 4.76% think the rate will remain the same until 2023.


Chief economist from Efficient Group Dawie Roodt is one of the more optimistic panellists, saying that the rate will move in November of this year because “CPI and CPI expectations are likely to be rising by then.”

Head of research at Intellidex Peter Attard Montalto says that the start of slow normalisation should see the repo rate rise in the first half of 2022, whereas senior lecturer/researcher at the University of the Free State Dr Johan Coetzee says that the next rate rise will come in the second half of 2022 and will be reliant on the rollout of a COVID-19 vaccine.

“Not until the economy opens up to its full capacity and the global economic environment does the same, can we expect the SARB to consider interest rate changes,” Coetzee said. “The success of the vaccine rollout is central to this. In effect, therefore, the conditions driving an interest rate increase are primarily driven by exogenous factors largely out of our immediate control.”

Dean of the University of Pretoria Elsabe Loots is the least optimistic, saying that the next rate rise won’t be until 2023 and citing the need for “stronger growth, increase in inflation and some stronger downward trend in unemployment.”

When will GDP per capita and employment return to pre-lockdown levels?

It could be a while before South African GDP per capita and employment recover to pre-COVID levels, with the earliest prediction of a return expected in the second half of 2022, which was predicted by 10% of the panel.

A quarter of the panel thinks a recovery is possible by 2023, 15% say 2024, 25% say 2025 and the remaining 25% believe beyond 2026.

What should the South African government be doing to address the declining GDP?

When asked for ways in which the South African Government could arrest the fall of GDP per capita, the majority of economists (90.48%) pointed towards investing in infrastructure to increase production capacity as the number one solution for the government. Another popular solution was privatisation and deregulation (80.95%), followed by cutting taxes to increase disposable income (19.05%).


Weeding out corruption and restoration of law and order were part of the focus for three panellists: Old Mutual chief economist Johann Els, professor at Wits Business School Jannie Rossouw, and Dr Johan Coetzee. Els says that South Africa needs a “continued strong anti-corruption fight”, while Rossouw says that “lawlessness makes South Africa an unattractive investment destination”.

South Africa’s annual growth rate

The IMF forecasts South Africa’s annual growth to be at 3.1% in 2021, up from their January forecast of 2.8%. It’s projected to be at 2% in 2022. When asked to weigh in on these predictions, 57.14% of the panel said they did not agree.


Of those who disagreed with the IMF’s forecast, the average panellist said the annual growth rate would hit 3.64% in 2021 and 2.1% in 2022.


Johann Els was most bullish on South Africa’s annual growth rate in 2021, believing it will hit 5% for a list of reasons:

  1. Rebound from 2020.
  2. Stronger agricultural production.
  3. Very strong global support through strong growth, high commodity prices and a weaker US dollar.
  4. Turnaround in the inventory cycle: the sharp depletion of inventories last year should gradually ease in the first half of 2021 and will likely rebuild again from the second half of the year onwards. This will add strongly to GDP growth.
  5. Excess savings from consumers (spending collapsed more than income) will likely be used to buy consumer and durable goods as confidence improves.
  6. While a third COVID-19 infection wave is likely, South Africa will probably only enforce a limited lockdown (as per January and February 2021 during the second wave), which has a far more limited economic impact than the hard lockdown of 2020.
  7. Confidence will likely improve on the back of better growth, lower fiscal risks, a strong rand and continued low inflation and low interest rates.

EFConsult chief economist Frank Blackmore is also bullish on growth in 2021, predicting a growth rate of 4% and saying “base effects to account for more growth in 2021 even with low year-on-year real increases.”

At the other end of the spectrum is CEO and chief economist at Antswisa Transaction Advisory Services Miyelani Mkhabela, who not only gave the lowest prediction from an economist on the panel, but also predicted a lower growth rate than the IMF forecast at 1.6%, saying that the IMF is being too optimistic:

“The IMF has generally been too optimistic annually for the past 5-8 years. Their economic forecasts are too high at the beginning of every year. I expect the IMF to review downward in the last quarter of 2021. The Chinese, United States and other European markets’ growth will not change the challenges that the South African economy is currently facing. Developed economies will recover within 24 months, but it will take South Africa longer to recover. You must pump enough funds to the key economic drivers like infrastructure development and we haven’t started all that.”

What will it take for the economy to recover?

Last month, President Cyril Ramaphosa stated that for the South African economy to recover, a new path needs to be forged. But what should be the immediate focus to lead the economy onto the path of recovery? The most common response from our panel is that economic recovery lies within cuts to government spending aimed at stabilising the debt-to-GDP level (30%), followed by increasing employment opportunities (25%) and investing in the digital economy (10%).


One other common solution cited by three panellists was deregulation, with Professor Waldo Krugell from NWU saying that “deregulation in all spheres, specifically energy” is needed.

Citi economist Gina Schoeman was one of the panellists who believes in cutting government spending to stabilise the debt-to-GDP level and believes that “management of the fiscal situation is a powerful yardstick of government will and efficiencies.”

Investec chief economist Annabel Bishop favours investing in the digital economy, believing that “South Africa needs to digitise the economy, including all state bureaucracy with the private sector to avoid missing out on faster growth.”

While Kruger thinks that increasing employment opportunities is the best way forward, “more employment leads to more expenditure in the economy, which leads to more tax revenue and overall improvement in the economy.”

Economist at RMB Siobhan Redford believes that the road to recovery requires addressing all three areas:

“Economic policy cannot have only one focus and needs to consider short term needs and constraints, the medium term and the long term. Investing in the digital economy is likely a medium-to-long-term investment. However, we need to increase employment opportunities in the short term and government debt-to-GDP is an important factor in reducing borrowing costs for the public and private sector. An approach to recovery needs to be focused, but does need more than one objective.”

Property price forecasts

Property prices in South Africa’s 10 biggest cities are set to increase by an average of 5% over the next 6 months, according to 8 of the panellists who provided property forecasts. That’s up from the average forecasted increase of 2.2% in Finder’s March survey.

On average, Cape Town is expected to increase the most (8%), followed by Johannesburg (6%) and Durban (6%). Meanwhile, cities like Benoni and Pietermaritzburg are set to increase by just 3%.

What does the future hold for the real estate market?

The South African real estate market is fairing well, with the value of home loans going up by 35% and the residential property market even ending 2020 stronger than it did in 2019. And this trend is set to continue in 2021, according to the majority of panellists (56.25%). Only about a third (31.25%) said it won’t continue and 12.5% said they’re unsure.


Chief economist from Alexander Forbes Isaah Mhlanga thinks that “low-interest rates and the recovery in the economy” will be a driving factor.

CEO for Jawitz Properties Herschel Jawitz is iffy on whether gains will continue at their current level but is optimistic about the future:

“Maybe not to the same extent but record low interest rates, mortgage liquidity and current good price value in the market are driving demand.”

However, analyst at Nedbank Reezwana Sumad thinks that these increases may only last until 2022:

“Higher interest rates in 2022 may limit the rally in the property market unless employment recovers meaningfully.”

Upcoming Monetary Committee meetings for 2021

  • 20– 22 July
  • 21– 23 September
  • 16 – 18 November

Image: Getty

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