South Africa’s Q3 GDP growth seen rebounding to 1.5% q/q, 1.1%-1.3% y/y - polls

By bne IntelliNews November 24, 2014

South Africa is set to report a higher GDP growth for the third quarter, when the economy started to recover from the strikes that crippled the mining and manufacturing industries during the first seven months of the year. On November 25, at 9:30 GMT, Statistics South Africa will release keenly expected Q3 GDP data, which will also include the results from a GDP rebasing and revising exercise.

A BDlive survey of eight economists showed a median consensus forecast for a seasonally adjusted GDP growth of 1.5% q/q in Q3 following a 0.6% q/q expansion in Q2 and a 0.6% q/q contraction in Q1. Sectors such as finance, business services, general government services, and retail are likely to have driven growth over the period. We should note here the central bank’s recent remark that despite the expected improved growth outcome in Q3, "this is off a low base following prolonged strikes in the mining and manufacturing sectors".

The manufacturing industry, which shrank 2.1% q/q in Q2 and 4.4% q/q in Q1 hit by the spillover effects from the mining strike, is expected to show a continued subdued performance, as it was plagued by an industrial auction in the key metals and engineering sector during most of July. According to recently released data, the Q3 manufacturing production decreased by 0.6% y/y and by 1.3% q/q.

On the other hand, the mining sector, which contracted 9.4% q/q in Q2 and 24.7% q/q in Q1, might show some improvement, as mineral output rose 0.7% q/q in Q3 after a flat performance in Q2.

Analysts at First National Bank (FNB) write that GDP growth could have rebounded to 1.6% q/q in Q3 on the back of improved activity in the mining and trade sectors.

According to the Mail&Guardian, analysts at 4CAST anticipate South Africa’s y/y GDP growth to have accelerated slightly to 1.1% in Q3 from 1.0% in Q2, but to remain below Q1’s 1.6%. A Reuters poll of economists suggests a 1.3% y/y GDP growth in Q3.

However, FNB points out that the re-weighting and rebasing of GDP, which is likely to result in minor revisions to previous GDP numbers, means that the Q3 data is subject to significant forecast risk.

Under the exercise, Statistics SA has changed the reference year from 2005 to 2010 in line with its practice to do this every five years. According to a research note by HSBC SA economist David Faulkner, quoted by BDLive, the data revisions are likely to show the waning importance of manufacturing, mining, and utilities, due to the global financial crisis, local recession, repeated strikes and electricity supply constraints. On the other hand, finance, real estate and business services, and government are likely to boost their contribution to GDP.

Looking beyond the Q3 GDP report, South Africa’s recovery could strengthen further in the current quarter as there have been no labour disruptions. A major risk for growth, however, is related to power supply constraints, as the national utility Eskom has been has been troubled by problematic plant performance and unplanned outages recently.

South Africa's full-year GDP growth is widely expected to remain subdued at around 1.4% this year, plagued by the recent strikes and electricity supply shortages that hurt domestic production and exports, as well as by the fragile global recovery. The rate of GDP expansion might double next year, but will still remain well below the growth potential of around 5%.

Related Articles

Almaty cost of living lowest among major cities

Kazakhstan’s largest city and business centre Almaty has dropped to last place on the Economist Intelligence Unit’s bi-annual ranking of the ... more

AB InBev sells 54.5% stake in African Coke bottling business for $3.15bn

Anheuser-Busch InBev will sell a 54.5% stake in Africa's largest Coke bottler to Coca-Cola Company for $3.15bn, the two companies said in a joint statement on December 21. The deal is expected to ... more

IMF slashes South Africa’s 2016 growth outlook to 0.7%

The International Monetary Fund (IMF) has lowered sharply its 2016 GDP growth forecast for South Africa to just 0.7% from 1.3% anticipated in October, its World Economic Outlook (WEO) update released ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss