THE rand will remain under pressure this year and is likely to end the year near R9,10/$, in turn boosting exports and economic growth, Econometrix chief economist Azar Jammine said on Thursday.
Speaking at the Gordon Institute of Business Science and Business Day’s Economic Outlook 2013 conference in Johannesburg, Mr Jammine said recent strikes and social unrest had led to South Africa winning the currency war by default.
Investor fears over labour and social unrest and a burgeoning current account deficit pushed the rand past R9/$ on Thursday.
"The decline in the rand since the middle of 2011 is going to continue," said Mr Jammine. "By year-end we won’t be weaker than we are now."
He was more optimistic than most on this year’s economic growth outlook, saying the most telling figure was the Reserve Bank leading indicator, which rose for the fifth consecutive month in November, indicating that economic activity may be stronger in the next few months.
"That tells me 3% (growth) for this year is still not impossible. I’m slightly more optimistic than consensus forecast", he said.
The International Monetary Fund on Wednesday revised down its 2013 growth forecast for South Africa to 2.8%, from a 3% estimate in October.
However, the modest pace of acceleration in the indicator — which provides a guideline for economic growth for at least six months ahead — suggested growth would be tentative and not enough to meaningfully change South Africa’s unemployment rate.
Mr Jammine added that growth was likely to be driven by improved exports and spending on infrastructure.
He forecast inflation to rise this year, but not "dramatically’" enough to make the Bank hike interest rates. A survey of leading economists earlier in the week predicted no change in rates when the Bank’s monetary policy committee concluded its three-day meeting on Thursday afternoon.
Improving education, addressing the labour market environment and developing entrepreneurs and small businesses would help address unemployment, Mr Jammine said.
He added that the National Development Plan, the government’s multi-year economic blueprint, "was by far the most comprehensive" attempt so far to address South Africa’s challenges.