Economy likely to show little growth
The release of thirdquarter GDP data on Tuesday will be the main focus this week, along with a survey of consumer confidence that reflects the shape of household finances as the country heads into the festive season.
GDP is likely to have slowed in the three months ended September from the MarchJune quarter despite the relative stability in the electricity supply.
The mining and manufacturing sectors are likely to have stagnated, outweighing the expected improvement in financial services and agriculture. Mining and manufacturing have been labouring under the weight of tepid internal and external demand, compounded by the fallout from an inadequate electricity supply, as well as inefficient rail and port infrastructure.
For the mining sector, export commodity prices remain weak on a relative basis, though iron ore prices have made a strong comeback in recent weeks.
“We expect GDP essentially to have stalled in the third quarter,” Standard Bank economist Elna Moolman said. GDP will probably have grown 0.1% quarter on quarter.
“Notwithstanding the easing in load-shedding in the third quarter, the goods-producing sectors likely performed worst. Indeed, in recent years, the services sectors generally outperformed the goodsproducing sectors — this is unsurprising given that the goods-producing sectors would generally be more affected by the binding infrastructure constraints.”
SA’s GDP will probably have grown 0.2% in June-September, according to Trading Economics, slowing down from 0.6% in the second quarter.
“I expect negative quarterly growth rates for mining, manufacturing, and transport and communication,” said independent economist Elize Kruger. “Best sectoral performance is likely to come from the financial services sector, while small positive contributions are also expected from agricultural, electricity, personal and government services.”
The FNB/BER consumer index for the fourth quarter, compiled by the Bureau for Economic Research (BER) in partnership with FNB, will be released on Thursday.
The survey provides regular assessments of consumer attitudes and expectations and is used to evaluate economic trends and prospects.
DURABLE GOODS
FNB economists said in a note that confidence across the spectrum remains below the long-term average, highlighting concerns regarding general economic prospects.
“While consumer perceptions of the appropriateness to purchase durable goods at present are less pessimistic, views on expected household finances have barely changed. This suggests some contention within consumers, as softer inflation and continued job creation should allow slower real wage compression and strengthen spending capacity.”
SA’s current account balance data for the third quarter will also be released by the Reserve Bank on Thursday. As a percentage of GDP, the current account deficit was 2.3% in the second quarter, compared with a current account deficit of 0.9% in the first quarter.