Johannesburg - Steady manufacturing and retail could give South Africa’s gross domestic product (GDP) a boost, but subdued growth for the country will continue to dog its development.
Statistics South Africa (Stats SA) is set to release its GDP estimates for the third quarter of 2017 on Tuesday
Last month economists wagered that South Africa’s GDP growth is likely to beat forecasts in the third quarter, and accelerate into year-end and in 2018. This was on the back of falling inflation and declining interest rates that boosted consumer and business investment spending.
While analyst Johan Bierman from Grafiek Retoriek predicted that indicators pointed to a positive GDP growth for the third quarter, he said nothing spectacular should be expected.
“Unless policies become more ‘pro-business’ and address policy uncertainty, we will continue to see strained growth.”
South Africa exited a technical recession in the second quarter of 2017, after GDP rebounded with 2.5% growth for that quarter.
South Africa's GDP growth rate has performed dismally in the recent years with business and consumer confidence plummeting as political crises, rating agencies downgrades and state capture allegations gripped the country.
Investment in South Africa is low, and businesses have indicated the political uncertainty makes it difficult to plan ahead for growth.
Tuesday’s announcements will be the first since S&P downgraded South African debt to junk status.
Moody’s, the only major agency who still rates South African debt as investment grade, has placed it on downgrade review pending the December ANC National Conference and February 2018 Budget.
Other ratings agency Fitch in November opted to keep the economy’s debt at junk.
Last year the South African economy only managed to grow by 0.3%
But the South African Reserve Bank (SARB) upgraded their growth forecast to 0.7% expected growth for 2017 from +0.6% during their November 2017 Monetary Policy Meeting. The bank had, however, downgraded its 2018 and 2019 growth rates to 1.2% and 1.5% respectively.
Initial indicators show that retail sales were positive during the third quarter, increasing by 1.4%, and sales increasing by 2.1%, based on seasonally adjusted values.
Manufacturing volumes also continued to grow, increasing by 1% during the third quarter. Increased gold production outputs saw higher mining production during the third quarter, with commodity prices dampening the growth.
Manganese ore and iron ore were they only minerals that saw significant declines in production during the third quarter, Biermand said.
He said South Africa’s trade balance remained positive for all three months of the third quarter, with January the last time South Africa recording a negative trade balance.
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