Economists predict economy will shrink as SA’s GDP figures contract

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The country’s economy is expected to contract yet again in the third quarter of 2019. Economists expect South Africa’s Gross Domestic Product (GDP) for third quarter to contract between 0,1% and 0,5%  quarter-on-quarter.

A Reuters poll shows that economists expect year-on-year GDP growth for 2019 to reach a dismal 0,4%.

Statistics South Africa will this week release the country’s third quarter GDP numbers.

Some economists believe the country’s economy will likely suffer another quarterly contraction. Real GDP growth recorded 3,1%  quarter-on-quarter in the second quarter of 2019.

Economists say recently-released economic data indicates all major sectors under performed in the third quarter of 2019.

“It’s a notable moderation. I still have a positive growth rate in, however, there is a risk that the number could be negative if we get a disappointing performance like the agriculture or the transport sector. So we are pretty close to zero for  a quarter on quarter number which will give us more or less 0.4 year-on-year growth number,” says a Senior Economist at NKC African Economics, Elze Kruger.

“The monthly numbers suggest that we have lost momentum again in the third quarter and that momentum was fairly very broad based and it wasn’t isolated to one or two sectors really a sort of general pattern we have seen in almost all the sectors you can think of and so overall our forecast is for GDP growth is 0.5% on a quarter on quarter annualised basis. It’s really weak stuff and it’s the sort of thing that will not inspire anybody at this time unfortunately,” says senior economist at Nedbank Nicky Weimer.

The second quarter saw a large decrease in mining and manufacturing with little growth in retail sector. Economists expect the same sectors to remain constrained in the third quarter with some sectors like transport and accommodation showing signs of growth.

Growth in manufacturing is expected to remain weak while rating agencies have raised red flags regarding the deteriorating debt ratios and the weak economic growth. S&P Global Ratings, which already has government debt at sub-investment grade, last month changed South Africa’s outlook from stable to negative.

Moody’s affirmed the country’s long term foreign and local currency debt ratings at ‘Baa3’ and revised the outlook to negative from stable.