An economist from Stellenbosch University’s (SU) Bureau of Economic Research (BER) was recently awarded the 2021 South African economist of the year award.
Hugo Pienaar, chief economist at BER, received the award on 1 August, said Hanlie Stadler, business editor for Netwerk24.
Pienaar told MatieMedia that, while they have been fairly successful in other forecasting competitions, it was “a treat” for BER to have an economist win this award for the first time in the 34 years that the competition has been running.
“The prize pays tribute to the BER team’s skill in combining model outcomes and professional judgement to generate the most accurate forecast across many variables for 2021 amongst its peers,” said Wim de Villiers, rector and vice-chancellor of SU, in written correspondence with MatieMedia.
Hugo Pienaar is the winner of the South African economist of the year award for 2021. The award is “another feather in [the Bureau of Economic Research’s] cap for the sort of work that we do, especially on the forecasting side”, said Pienaar. PHOTO: Supplied/Hugo Pienaar
Competitive advantage
The competition was created in 1988 to provide the public with information about the “economic conditions which affect their decisions and their lives”, said Stadler in written correspondence with MatieMedia.
The annual competition has been run by Beeld, Die Burger, Volksblad, Rapport and Media24 in recent years, according to Stadler.
The award for 2021 was announced on 1 August 2022, as there is a lag in the release of some of the economic data for the year, according to Pienaar.
“I think in 2021, the uncertainty was how strong the bounce-back would be after this crash in 2020,” said Pienaar.
Risk premium
The 36 economists who participated in the 2021 competition forecasted eight economic variables, including gross domestic product (GDP) growth, inflation, gold price and household expenditure growth, according to Corné van Walbeek, adjudicator of the competition, in written correspondence with MatieMedia.
“There were no large interest rates, commodity prices or exchange rate shocks during the course of 2021, so the winner would be someone who took an ‘average’ view,” said Van Walbeek.
The economists forecasted the variables for 10 months in 2021, said Stadler. The accuracy in forecasts made at the start of the year contributed significantly more to the score an economist received, she explained.
This system is logical, as “it is much easier to predict in November what the average gold price for 2021 would be, since you have 10-plus months of data”, she explained.
The market for media
It is very important for economic forecasters to have a well-developed filter when it comes to news consumption in order to establish whether events in the news will have a material impact on a forecast, Pienaar said.
“You get new bits of information and you tweak your forecast – not significantly, but you keep on tweaking and then, eventually, you come up with something reasonable,” said Pienaar.
“The average economist does consume a hell of a lot of news on a daily basis,” said Hugo Pienaar, chief economist at the Bureau of Economic Research and the winner of the 2021 South African economist of the year award. PHOTO: William Brederode
Loadshedding, inflation and instability in the global economy are the most significant news events currently on his radar for the short-term, said Pienaar.
“We’re going to sit with fairly high inflation. The [South African] Reserve Bank will probably need to increase the interest rate somewhat further – we don’t think massively,” he said.