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South Africa May Exit Recession But ‘Dismal’ 2018 Growth Awaits

South Africa will probably exit its second recession in almost a decade in the third quarter, but full-year growth will still be dismal, economists said after the the release of data for the first month of the quarter.

  
While manufacturing expanded the most in 25 months year-on-year in July, mining output shrank the most since October 2012 on a monthly basis, data released by Statistics South Africa this week showed. Retail sales climbed less than estimated on an annual basis.


“The high-frequency data has been disappointing” for the third quarter so far, said Jason Muscat, an economic analyst at FirstRand Ltd.’s First National Bank retail-banking unit. “The implications of these numbers, depending on what happens in August and September, will be for a flat contribution to gross domestic product.” He sees GDP expanding about 1.5 percent in the third quarter from the previous three months and 0.7 percent for the year.

Falling Behind
South Africa's 2018 economic growth may be far below the president's wish


President Cyril Ramaphosa’s wish of 3 percent growth this year is looking increasingly unattainable. Economists and rating companies are cutting their forecasts for GDP expansion and a global trade war has damped optimism of stronger world growth.

 
Subdued business confidence, weak activity in the supply side of the economy and headwinds to household spending will hinder a robust recovery, Finance Minister Nhlanhla Nene said Monday.

“It could be that we see a bit of a spike in the next month or two and I’m 
hopeful for a positive number in quarter three,” said Elize Kruger, a Johannesburg-based senior economist at NKC African Economics. “There are so many headwinds -- higher fuel prices, value-added tax increases, and the possibility of an interest-rate increase toward the end of the year. For the year as a whole, it will be dismal.” Bloomberg- 


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