Premium
Estimating South Africa's Output Gap and Potential Growth Rate
Author(s) -
Fedderke Johannes W.,
Mengisteab Daniel K.
Publication year - 2017
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12153
Subject(s) - potential output , economics , psychological resilience , output gap , range (aeronautics) , resilience (materials science) , growth rate , monetary economics , interest rate , mathematics , monetary policy , engineering , psychology , physics , geometry , psychotherapist , thermodynamics , aerospace engineering
This paper estimates the potential output of the South African economy using several filters. We demonstrate that potential output measures are very sensitive to the different methodologies. We also provide estimates of South Africa's potential growth rate over the 1960–2015 period. Current estimates of the potential growth rate fall in the 1.9%–2.3% range. However, the evidence suggests that the rate is under considerable downward pressure. South African potential growth may be headed toward the 1% range. The strongest decline is in the real sectors of the economy (Manufacturing, Mining), the greatest resilience in the service sectors (financial in particular).