GDP growth slowed more than market expectations

gdp

South Africa’s third quarter GDP slowed more than the market expected.  This is according to the Nedbank Group Economic Unit.

Earlier today, Statistics SA released data showing that real GDP expanded by 0,2%, down from an upwardly revised 3,5% growth rate in the second quarter and slightly worse than the consensus market forecast of a 0,5% increase.

Over the quarter, the main drag came from declines in value added by manufacturing (-3,2%), ‘trade, catering and accommodation’ (-2,1%), ‘electricity, gas and water’ (-2,9%) and agriculture (-0,3%).  In contrast, the largest positive contributions came from stronger growth in value added by mining (5,1%) and general government services (1,8%).

In the first three quarters of this year, GDP grew by only 0,4% compared with the same period a year ago.

The Nedbank Group Economic Unit says expenditure on GDP increased by a seasonally adjusted annualised 0,5%, down sharply from 3,7% in the second quarter. The main drag came from a weaker net exports position, which subtracted 7,5 percentage points, as exports fell by 26,4% while imports contracted at a slower rate of 4,9%.

The main boost to expenditure came from a R20 billion increase in inventories, followed by stronger growth in household consumption expenditure, which rose by 2,6%.

Gross fixed capital formation remained weak, falling for the fourth consecutive quarter, but the rate of contraction at least slowed to 1% from close to 7% in the second quarter.

The Nedbank Group Economic Unit says it expects the economy to fare only slightly better in the final quarter of this year, producing a GDP growth rate of around 0.4% in 2016 as a whole.

“The outlook for 2017 remains uncertain, with more positive contributions expected from agriculture, mining and manufacturing.  However, consumer spending will remain constrained, but confidence should improve as inflation eases and interest rates begin to fall in the second half of next year.  Expectations of stronger growth should also encourage some recovery in fixed investment off a very low base.  In contrast, further restraint is expected from government given the need to restore fiscal discipline.  On balance, the economy is likely to grow by just over 1% in 2017.”

Nedbank adds that some of the key concerns that the Reserve Bank’s Monetary Policy Committee (MPC) highlighted in November have since eased.

“Today’s GDP figures confirm that the economy remains weak but at least managed to grow, however modestly.  South Africa also recently escaped damaging sovereign risk rating downgrades to junk status.

“Although these developments have reduced the chances of further monetary tightening in early 2017, the MPC is likely to remain cautious given the downside risks posed to the rand by a volatile domestic political landscape and changing global dynamics.  Consequently, the probability of another 25 basis point hike in interest rates early next year cannot be completely ruled out.  By the second half of 2017 interest rates should begin easing as inflation begins to fall.”



Latest


16 Feb 2021
Transition management services partnership announced

Standard Bank has signed a memorandum of understanding (MoU) with Chicago-headquartered financial services company Northern Trust, to partner on the…

Transition management services partnership announced

Standard Bank has signed a memorandum of understanding (MoU) with Chicago-headquartered financial services company Northern Trust, to partner on the delivery of transition management services across Southern Africa. Under the partnership, Standard Bank’s clients will gain access to Northern Trust’s full suite of transition management services. Transition Management is a…

16 Feb 2021
Tax free wealth creation with property funds

By Liliane Barnard, CEO and Portfolio Manager at Metope Investment Managers, and Aimee Glisson, Director: Operations, Performance & Risk at…

Tax free wealth creation with property funds

By Liliane Barnard, CEO and Portfolio Manager at Metope Investment Managers, and Aimee Glisson, Director: Operations, Performance & Risk at Metope Investment Managers The tax year, along with the deadline for an investor’s maximum R36 000 annual tax-free savings account contribution, comes to an end on the 28 February 2021. Investors…

16 Feb 2021
Why multi-manager investing is popular

Multi-management has been around for over two decades. This investment management approach is popular among many investors because it promises…

Why multi-manager investing is popular

Multi-management has been around for over two decades. This investment management approach is popular among many investors because it promises to deliver smoother, more consistent investment returns, despite cyclical turbulence of financial markets. Given last year’s drastic swings in financial markets and continued uncertainty on how the Covid pandemic will…

16 Feb 2021
Momentum Health Solutions unpacks COVID-19 vaccine roll-out plan

Momentum Health Solutions announced its COVID-19 vaccine roll-out strategy and how it intends to support both its members, as well…

Momentum Health Solutions unpacks COVID-19 vaccine roll-out plan

Momentum Health Solutions announced its COVID-19 vaccine roll-out strategy and how it intends to support both its members, as well as the uncovered population, in being vaccinated. As the COVID-19 virus continues to spread, a third wave is imminent, should the vaccination rollout not commence soon. Speaking at a recent…


Top stories


10 Sep 2020
How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key…

How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key that dubbed America “The land of the free”, which stuck, to the unforgettable Mel Gibson monologue where an army of painted Scots were willing to trade their lives for the…

13 Apr 2020
Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19…

Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19 environment and what form a global market recovery will take.

13 Apr 2020
SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The…

SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The draft Bill, together with its explanatory memorandum, provides clarity with regards the tax relief measures President Cyril Ramaphosa announced on 23 March.

10 Apr 2020
When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved…

When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved to be most enterprising in acclimatising to challenges as they arise.


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za