Slower growth likely

The economy will have continued to expand into the third quarter, although growth is unlikely to be as robust as it was during the second quarter, data to be published this week are expected to show.

The GDP data will be published by Statistics SA on Tuesday, on the same day that the South African Reserve Bank will publish data on the balance of payments.

Maarten Ackerman, chief economist and advisory partner at Citadel, said: “We are coming off a higher base now.”

Key considerations for economists when determining the GDP outcome are data on electricity generation, mining and manufacturing, vehicle sales, building plans passed and retail sales.

A Citadel econometric model showed that for July, August and September it was a tough and volatile period for mining, while manufacturing and retail performance showed reasonable improvement — an indication that the consumer was not “totally on their knees”, Ackerman said.

“The model suggests we probably won’t see a negative quarter. We’re not in a recessionary kind of environment anymore but we’re definitely not going to see as strong a number as we did see in the second quarter.”

The Citadel house view is for GDP growth of between 1% and 1.7%, even as business confidence and consumer confidence continue to languish at historically low levels.

On Wednesday the South African Chamber of Commerce business confidence index will provide fresh insight into business confidence levels after the RMB index last week showed that sentiment remained depressed.

The Reserve Bank’s most recent leading indicator — a gauge of economic health — showed an economy still weak “but not collapsing”, said Ackerman, who expects total growth of just more than 1% for 2017 compared with market consensus and revised forecasts from the Reserve Bank, Treasury and the IMF for growth of 0.6 to 0.8%.

“I think the market is probably a little bit overpessimistic… If you get growth of 1% for the last quarter, then [total] growth is very close to 1.2%,” he said.

FNB was more bullish on third-quarter growth than market consensus, said its chief economist, Mamello Matikinca. “The primary sector has performed well and should provide good growth impetus despite weakness in manufacturing, construction and electricity demand.”

FNB forecast GDP growth of 3% for the third quarter from 2.5% in the second quarter.