GDP growth expected to be lower than 1%
Third-quarter GDP growth is widely expected to come in at less than 1% when the figure is released by Statistics SA on Tuesday, kick-starting a week packed with crucial industrial activity indicators.
Business and consumer confidence have been generally depressed in 2016, with the trend expected to continue for the remainder of the year. This has been one of the biggest contributors to the growth slump because it correlates with spending in the economy.
Major subsectors have experienced slower growth since second-quarter GDP came in at a surprise 3.3%. This came on the heels of a 1.2% first-quarter contraction.
An economic strategist at Novare, Tumisho Grater, said GDP growth expectations averaged 0.3%.
Nedbank economists said in a research note they forecast third-quarter GDP at 0.4%. Standard Bank predicts 0.6% quarter-on-quarter growth.
The Reserve Bank expects 2016 growth to average 0.5%.
“At this stage there is no indication of a major event that will result in a boost in GDP growth,” Grater said.
Nedbank economist Johannes Khosa said mining would probably be a drag on third-quarter growth because of subdued global demand and a persistent commodities slump.
“The same factors are also expected to have put a damper on the manufacturing sector,” he said.
Poor business confidence and low domestic demand would have contained capital spending in the private sector, which would have resulted in a poor performance of construction, trade, and the transport and communication sectors.
Khosa said agriculture, which contracted 0.8% in the second quarter, would have improved as drought receded.
The Standard Bank purchasing managers’ index is due out on Monday and is expected to indicate whether manufacturers are optimistic about their prospects going into the last quarter of 2016.
South Africans will get relief at the pump on Wednesday, when all grades of petrol will drop by 20c a litre. Diesel will be 31c or 32c cheaper, depending on the grade.
Manufacturing production and sales data are due on Thursday, and are forecast to reflect a slight improvement to 0.6% for October following no growth in September.
Mining production and sales will also be published on the same day. On an annual comparison, mining production is expected to have remained resilient in 2016 compared with 2015.
The Reserve Bank rounds off the numbers week on Friday, when it will publish an update on the third-quarter current account deficit.
The deficit is expected to have widened to between 3.5% and 4% of GDP, from 3.1% during the second quarter.