Macroeconomic Uncertainty in South Africa

Macroeconomic Uncertainty in South Africa

Author: 
Redl, Chris
Place: 
New York
Publisher: 
John Wiley & Sons Publishing Company
Date published: 
2018
Record type: 
Journal Title: 
South African Journal of Economics
Source: 
South African Journal of Economics, Vol. 86, No. 3, September 2018, pp. 361-380
Abstract: 

This paper develops a new index of economic uncertainty for South Africa for the period 1990-2014. The index is constructed from three sources: (1) Disagreement among professional forecasters, (2) a count of international and local newspaper articles discussing economic uncertainty in South Africa and (3) mentions of uncertainty in the quarterly economic review of the South African Reserve Bank. The index shows high levels of uncertainty around the period of democratic transition in 1992-1994, the large depreciation of the currency in 2001 and the financial crisis of 2008. The uncertainty index is a leading indicator of a recession. An unanticipated increase in the index is associated with a fall in GDP, investment, industrial production and private sector employment. Contrary to evidence for the U.S.A and the U.K., uncertainty shocks are inflationary. These results are robust to controlling for global uncertainty shocks, consumer confidence and financial shocks.

Language: 
Country focus: 
Date created: 
Thursday, December 6, 2018