Johannesburg - Economic growth could taper off somewhat in the second half of this year after strong growth in the first half, judging from the South African Reserve Bank's leading indicator, which has lost some steam.
In February the indicator rose a mere 0.3 index points to 125, after having bounded ahead in January and November.
The indicator's 18.4% year-on-year growth was also slightly down on January's year-on-year growth of 18.8%.
Economists.co.za economist Mike Schüssler says the indicator's slight movement shows that economic growth could taper off towards the end of the year and that the economy is currently experiencing its strongest growth for the year.
He says that the leading indicator is strongly linked to resource prices and the rise in these prices cannot continue indefinitely.
The indicator shows that the economy will certainly grow in the next few months, but the rate of growth will fall back.
The Reserve Bank's leading indicator shows what one can expect from the economy over the next six to nine months.
The coincident indicator, which is an indication of the current trend in the economic cycle, lifted by almost two points to 140.6 points. The indicator has been gradually rising for several months.
While the coincident indicator may not be rising vigorously, it does show that the economy is growing, says Schüssler.
The lagging indicator lost 1.6 index points down to 107.6.
This indicator includes sectors like the building industry and employment, Schüssler explains.
This confirms that both of these sectors are still under pressure. Employment will improve, but it will be a long time before previous levels are regained.
The leading indicator shows that sectors like manufacturing and mining are recovering and moving to the point where they will again show profits, but only when they again become profitable will they employ more people.
Consumers are therefore still under pressure.
On Friday the Reserve Bank will publish M3 money supply and private credit-extension figures for March. Credit extension, which indicates consumers' appetite for debt, has been contracting for five successive months and, according to Nedbank's economists, March will also see a contraction.
Schüssler expects the economy could grow 3.2% this year, after last year's 1.8% contraction. This is much better than the Reserve Bank and the International Monetary Fund's growth forecasts of 2.6%.
- Sake24.com