The Sa Business Cycle Over the 1990S and Current Prospects

Abstract

The domestic economic resilience and the surge in business confidence during 2001 and the first half of 2002 at the time of a synchronized world economic slowdown and major uncertainty on global financial markets hints at fundamental change in the domestic business cycle. The current paper assess whether the SA economy has embarked on a new structural growth path by studying the two business cycles over the 1990s in comparison with those since the mid-1970s. The paper finds that somewhat surprisingly the 1989-96 (peak-to-peak) business cycle corresponds closely to those of the 1980s, which were linked closely with the G7 countries industrial production cycle. The evidence points to visible structural change in the 1997-99 economic downturn and confirmed in the economic upturn commencing in 1999. The structural change is embodied in a stronger and more resilient endogenous business cycle momentum.