Nowcasting Real GDP growth in South Africa

Working paper 581
Author(s): 
Alain Kabundi, Elmarie Nel and Franz Ruch
Publication date: 
February, 2016
Classification-JEL: 
This paper uses nowcasting to forecast real GDP growth in South Africa from 2010Q1 to 2014Q3 in real time. Such an approach exploits the ‡ow of high-frequency information underlying the state of the economy. It overcomes one of the major challenges faced by forecasters, policymakers, and economic agents - having a clear view of the state of the economy in real time. This is often not the case as many economic variables are only available at low frequency and with considerable lags, making it di¢ cult to have information on the state of the economy
even after the end of the quarter. The pseudo out-of-sample forecasts show that he nowcasting model’s performance is comparable to those of professional forecasters even though the latter enhance their forecasting accuracy with judgement. The nowcast model also outperforms all other benchmark models by a signi…cant margin.
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