SA limped out of 2018 with growth below 1%
By Sunita Menon - Feb 19th, 14:20
SA will have limped out of 2018 with growth of below 1%.
While expectations are for growth to be marginally higher than in 2017, when growth was revised from a tepid 0.3% to 0.6%, it is clear that President Cyril Ramaphosa missed the mark with ambitious dreams of 3% growth.
The reality is that growth will be considerably less than half of that.
The latest string of data from StatsSA shows that the economy lifted in December, but overall growth remained woefully below initial forecasts for the year. The GDP figures will be released by StatsSA on March 5.
“Data from [last] week suggests a soft end to 2018,” Capital Economics economist John Ashbourne said.
As it stands, both the Reserve Bank and the Treasury expect growth of 0.7% for the year — both having halved their growth forecasts during the course of 2018.
SA plunged into recession for the first time since the global financial crisis in the first half of the year, which saw economists and institutions alike revise down their growth forecasts. Annual growth has failed to breach the 2% mark in the last five years. The economy struggled to gain momentum despite political changes.
A positive final quarter for the retail sector, coupled with growth in manufacturing production and a few other sectors, will have helped SA maintain positive GDP growth in the fourth quarter of 2018, but a weak performance in the mining industry will weigh on the figure.
“The pace of economic recovery remains slow, as evidenced by the weak December mining production statistics,” Nedbank economist Johannes Khosa said.
However, the numbers are nothing to write home about. The December figures were below consensus while the overall numbers for the year were modest.
In 2018, mining production plunged 1.6% compared with 2017, while manufacturing grew slightly, by 1.2%, while retail trade sales saw a boost of 2.1%. Based on the data, compared to a year earlier the economy hardly expanded, NKC economist Elize Kruger said.
The wild cards are the agricultural and financial services sectors, which have pulled growth down in previous years. However, economists are positive that growth will be positive in the fourth quarter and for the year as a whole. But it’s a far cry from what SA really requires.
Realistically, SA would need sustained growth of at least 5% to make a meaningful dent in the unemployment rate, which is nearing the 30% mark by the narrow measure. Ramaphosa has assured the nation that 5% is a realistic target, but forecasts for 2019 already indicate that economists are pessimistic about growth.
A constrained consumer, a buckling mining sector and continued load-shedding will weigh on growth. The reality is SA is still unlikely to breach the 2% mark anytime soon.Business Live
SA expected to sow fewer maize hectares than in previous seasons
26/11/2019 - 10:06
South African farmers are expected to sow 2.8% fewer hectares of the food staple maize next season than forecast in October after the planting season was delayed by rains, a Reuters survey of analysts showed.
SA on track for third year of moderating inflation
25/11/2019 - 09:41
SA’s largest asset manager Investec says SA is likely to see average inflation of 4.5% in 2020, with price pressure consistently moderating since 2016.
The clever shift SA's economy can make: economist
13/11/2019 - 13:29
Finance minister Tito Mboweni’s medium-term budget gave a blunt presentation of the financial issues facing South Africa and it is clear that government has finally come to grips with reality, says Efficient Group economist Francois Stofberg.
Billions in investments flow in to improve SA's economy
13/11/2019 - 11:30
More businesses have pledged billions of rands in investment to the ailing South African economy at the second investment conference in Sandton.
How a US-China trade deal could benefit SA
11/11/2019 - 09:53
Africa is poised to become the “land of opportunity” for bond and equity investors should the US and China strike a trade deal, Bank of America (BofA) says.