Nedbank Cut South Africa's 2023 Growth Outlook, Expect 25bp SARB Hike In May

Nedbank have lowered their 2023 growth forecast for South Africa to +0.2% Y/Y from +0.7% projected in January amid lack of progress in fixing the energy crisis, which will likely persist for the next three to five years.

• "Economic conditions deteriorated further during the first quarter, due to continued and severe power outages. The chances of slipping into a technical recession are high. Our base view is that the economy probably recorded no growth in the first quarter and that the economy will remain weak during the remainder of the year."
• "Although there are now three ministers in some way responsible for energy security, Eskom's operations have not improved. This is despite enormous fiscal support over the past decade amid persistent allegations of deep-seated corruption at the power utility."
• "With inflation still above the 3% to 6% target range, the Monetary Policy Committee (MPC) is likely to hike interest rates by another 25 bps in May. Thereafter, we expect interest rates to remain unchanged before falling by a cumulative 100 bps in 2024."
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