We might well be living the Chinese curse – not Covid-19, but the interesting times that it will deliver. A global economic tragedy is inevitable, only its true extent cannot be determined.If “all the world’s a stage”, as William Shakespeare’s pastoral comedy, As You Like It, would have it, then we can anticipate five stages to unfold: the anticipation stage, the dream stage, the frustration stage, the nightmare stage and the destruction stage. Without a shadow of a doubt, the world that we will return to once the lockdown has been lifted will be remarkably different from the one that we left so abruptly.

At times of great economic distress, there is one thing that you should never ever do, and that is to listen to economists employed by or affiliated to financial institutions. If you revere these individuals as forecasters, then you are doing yourself a great disservice; you are a far better forecaster than you give yourself credit for.

The world finds itself at the dawn of another recession. The last recession, the so-called Great Recession, lasted from December 2007 to June 2009, but its effects are still being felt today. And, as with Covid-19, it was not anticipated.

Not convinced? In his article, ‘Why you should never trust an economist’, Taylor Kee reminds us that, in 2006, just months before the Great Recession, US Federal Reserve chairperson Ben Bernanke said at the institution’s annual meeting: “Economic growth could rebound more vigorously than now expected. The solid rate of job growth, the decline in the unemployment rate, and the healthy pace of capital investment could be signals that underlying economic fundamentals are stronger than generally recognised. Moreover, to date, there is little evidence that the weakness in housing markets is spilling over more broadly to consumer spending or aggregate employment.” Only months later, weaknesses in the housing market cascaded into consumer spending, aggregate employment and just about every other sector of the economy, setting in motion a global recession, from which we have still not recovered.

How the world is going to survive this Eastern-inspired global recession is a matter for another article. This article is about your power of prediction, or rather your forecast of South Africa’s economic growth for 2020.

Just in case you believe you require vast amounts of data to do this, you, in fact, require little or no data at all. You need to rely on the insights of Enrico Fermi, who is known as the father of “solving maths problems we will never know the exact answer to”. For the cynical, Fermi’s estimates are informed guesstimates.

These estimates are also referred to as ‘back-of-the-envelope calculations’, or rough calculations, that are typically jotted down on any available scrap of paper, such as an envelope. These calculations are considered to be more than a guess but less than an accurate calculation or mathematical proof. I vividly recall how my father made his calculations on the back of his Rembrandt Van Rijn Filter De Luxe 20, a snap lid box. The back of the box was white.

But it is not only envelopes or cigarette boxes that are used for these estimations. In 1974, Arthur Laffer drew a graph on a bar napkin to show an aide to US President Gerald R Ford why the federal government should cut taxes. The Laffer Curve, which South Africa might soon run foul of, describes the relationship between tax rates and total tax revenue, with an optimal tax rate that maximises total government tax revenue.

In estimating South Africa’s 2020 economic growth rate, you will know that at last measure the economy was in recession. In 2019, the economy grew by 0.2% – the lowest rate since 2009 and a decline from 0.8% in 2018. What is your forecast? A whole percentage or a decimal?

And, yes, you can estimate it fairly accurately.