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Johannesburg - Bank of America/Merrill Lynch SA
has lowered its 2011 gross domestic product (GDP) growth forecast to 3.1% from 3.2%, and that for
2012 to 3.5% from 3.8%.
Risks remained to the downside, principally due to the uncertain global environment, said Matthew Sharratt, SA economist at the bank.
GDP growth in the third quarter was unlikely to be much better than in the second, Sharratt said. SA's economy grew 1.3% in the second quarter from 4.5% in the first.
"The July level of output in manufacturing, mining and electricity was below the Q2 level by -5.4%, -6.8% and -4.2% respectively. This would appear to preclude much of a pick-up in GDP growth in Q3, despite a likely rebound in retail activity last quarter," Sharratt said.
The bank expected GDP to expand a mere 1.4% annualised in the third quarter.
While the bank anticipated a partial rebound in August manufacturing data, due on Wednesday, this was unlikely to prevent a further deep quarterly decline in output, it said.
Some recovery was however forecast for the fourth quarter.
Sharratt said that leaving aside domestic challenges such as the July strike impact and the negative shock to the domestic motor industry in the second quarter in Japan, they expected to see acceleration in GDP growth in the fourth quarter to 3.3% annualised.
"The weaker rand should also help to reduce the drag from net exports. Next year, with hopefully some clarity to the eurozone debt crisis, a recovery in sentiment could see growth in SA improve," he said.
Sharratt warned however that the outlook was "extraordinarily clouded" and that risks remained to the downside.
With about 15% of SA's exports destined for the eurozone, a further 10% to the US and about 6% to the UK, the domestic economy was clearly exposed to negative external shocks from already weakened economies, Sharratt noted.
Risks remained to the downside, principally due to the uncertain global environment, said Matthew Sharratt, SA economist at the bank.
GDP growth in the third quarter was unlikely to be much better than in the second, Sharratt said. SA's economy grew 1.3% in the second quarter from 4.5% in the first.
"The July level of output in manufacturing, mining and electricity was below the Q2 level by -5.4%, -6.8% and -4.2% respectively. This would appear to preclude much of a pick-up in GDP growth in Q3, despite a likely rebound in retail activity last quarter," Sharratt said.
The bank expected GDP to expand a mere 1.4% annualised in the third quarter.
While the bank anticipated a partial rebound in August manufacturing data, due on Wednesday, this was unlikely to prevent a further deep quarterly decline in output, it said.
Some recovery was however forecast for the fourth quarter.
Sharratt said that leaving aside domestic challenges such as the July strike impact and the negative shock to the domestic motor industry in the second quarter in Japan, they expected to see acceleration in GDP growth in the fourth quarter to 3.3% annualised.
"The weaker rand should also help to reduce the drag from net exports. Next year, with hopefully some clarity to the eurozone debt crisis, a recovery in sentiment could see growth in SA improve," he said.
Sharratt warned however that the outlook was "extraordinarily clouded" and that risks remained to the downside.
With about 15% of SA's exports destined for the eurozone, a further 10% to the US and about 6% to the UK, the domestic economy was clearly exposed to negative external shocks from already weakened economies, Sharratt noted.
