ETSA offers a quality, tailor-made service based on a combination of our economic knowledge, specialised index application and a range of econometric models. The evidence-based models are mainly used to generate forecasts and for purposes of analysis and research.
ETSA has developed a quarterly macro-economic model that is specifically suited for South Africa as a small open economy. This model is designed to generate a range of economic forecasts and to perform policy analysis. Most of the other models developed by ETSA are integrated with the macro-model. This Keynesian demand-side model is based on sound economic theory as well as statistical principles. Using regression analysis and a combination of equilibrium and partial-equilibrium equations, this model combines international economic variables with commodity price forecasts to provide a suite of forecasts in ZAR terms for the South African economy.
The need for robust economic projections is increasingly important in major projects within the current economic environment. Traditionally, many costs were predicted to grow in line with general inflation (Consumer Price Indices or Producer Price Indices). However, with increased global interdependence and volatile commodity prices, there is a greater need first for sound forecasting methods, and second for improved methods to map expenditure. ETSA combines the results from the Index Forecasting Model and the methodology of the Index Price Containment Model to provide an estimated weighted escalation of any specific capital expenditure projects and operational expenditure.
ETSA's econometric gravity model is used to forecast potential international bi-lateral trade flows by looking at specific conditions. It is also used to establish which priority markets in the economy are underperforming when taking their trade potential into consideration. The estimated results are used to determine how resources could be allocated efficiently to utilise export growth and promote job creation.
We use indices to:
- Reduce cost
- Contain prices/costs
- Benchmark/mapping of prices/costs
- Justify/negotiate the adjustment of contract prices
- Anticipate economic and market trends
- Ensure effective commodity and supply chain strategies.
The selections of both local and international indices have to comply with the following minimum criteria:
- Published by an official or credible and recognised source (e.g. SEIFSA)
- Independently recorded and published
- Recognised internationally as an industry norm
- Must contain historical data
- Auditable at any time
A macro-econometric model is employed to forecast and analyse the South African economy, commodities and exchange rates. This model has been developed using internationally accepted statistical and econometric principles. The forecasts (and in particular the exogenous variables in the model) also draw from internationally accepted insights and forecasts, for example the World Bank and Economist Intelligence Unit.
- Macro-economic forecasting
- Inflation (SEIFSA and Statistic South Africa) forecasting
- Commodity forecasting
- Budget forecasting
Research, forecasting and hedging on commodities include:
- Client customised research on specific commodities
- Regular research and forecasts of Steel, Oil, Copper, Manganese, Ferro Chrome, Gold, Platinum and Uranium.