Third-quarter GDP data in the spotlight
The extent of the comeback in SA’s embattled economy during the third quarter will be the focus in a busy week for economic news.
Stats SA will release GDP figures for quarter three on Tuesday, which will outline the technical bounce-back from the second quarter’s record decline of 51%, measured on a quarteron-quarter and seasonally adjusted basis.
The contraction coincided with the worst of SA’s lockdown
— considered to be among the harshest globally — when business activity almost came to a standstill and the government introduced controversial bans on alcohol and tobacco sales.
Stats SA’s figures are adjusted for seasonality and annualised, which assumes the trend continues for the rest of the year.
On a non-annualised basis, the quarter-on-quarter decline during quarter two was 16.4%, and the fall between the second quarter of 2020 and 2019’s quarter two was 17.1%.
The consensus forecast from a Bloomberg survey of 12 economists suggests the thirdquarter uptick could be in the region of 54.6%, while the SA Reserve Bank forecasts growth will come in at 50.3%.
HIGH-FREQUENCY DATA
Absa economists Peter Worthington and Miyelani Maluleke said in a recent note that high-frequency data across various sectors for July to September “point to a stronger post-lockdown bounce in economic activity”.
Uncertainty about the overall pace of the recovery is, however, “unusually high, since large parts of the economy cannot be easily tracked due to a lack of high-frequency data”, they said.
They also said that despite stronger-than-expected near-term recovery, activity across most sectors for which high-frequency data is available remains below pre-lockdown levels.
The decline for the full year is still widely expected to be negative, with the Reserve Bank forecasting a contraction of 8%.
Even with a stronger recovery in the third quarter “it will take many years for the economy to fully recover to levels witnessed before the pandemic ”, FNB said in a note.
Consumer price inflation figures for November will be released on Wednesday.
October ’ s inflation numbers surprised by coming in higher than many forecasts suggested, at 3.3%, on the back of rising food prices.
A median forecast from Bloomberg expects inflation to slow to 3.2%, however, with Absa noting this is likely to be due to fuel price base effects.
RETAIL SALES
October retail sales figures will follow, also out on Wednesday. September showed the contraction in the sector had slowed to a better-thanexpected decline of 2.7% year on year.
Economists polled by Bloomberg expect the October data to show further improvements, with the decline slowing to -2.3% as lockdown restrictions continued to ease.
How long this can be sustained remains to be seen. Retailers had been looking to the festive season and Black Friday to help lift prospects for the sector.
But data released by BankservAfrica, which processes low-value card, ATM and EFT transactions, showed that transaction volumes plunged 33% during Black Friday this year vs 2019.
The value of transactions fell 52% year on year, an indication of consumers’ strained wallets.
Mining and manufacturing data for October is due from Stats SA on Thursday.
Manufacturing output has been improving as lockdown restrictions eased. By September, the contraction had eased to a fall of 2.6% year on year, compared with August’s decline of 11.1%.
But the Absa purchasing managers ’ index has begun to suggest that the pace of the recovery is losing momentum, particularly as trading partner regions such as the EU have had to reinstitute restrictions with a resurgence of Covid-19 cases.