SA baking 'recession omelette'?

Traditionally, economic upswings gather momentum before peaking. So also downswings before troughing, he notes.

Bruggemans feels SA is in transition "apparently, at full gallop".

"Inflation hasn't peaked yet, asset values search for a bottom, with the South African Reserve Bank (SARB) scheduled to tell us in August what comes next.

"Could South Africa, along with a growing list of other countries, currently be engaged in baking a recession omelette, in the process also breaking not a few eggs? Not that this condition came about willingly, far from it," he says.

Bruggemans notes that the peak of SA's eight-year long record-breaking upswing was probably reached sometime in late 2007.

"Since then we have embarked on a downswing. It apparently is still gathering momentum. It will be interesting to see where events and policy choice will eventually take it this year and next," he says.

Bruggemans concludes by wondering whether a "recession omelette" could be lurking in the future.

A recession is generally seen as two consecutive quarters of negative growth and global analysts Moody's recently pointed out that such a danger does exist when looking at consumer and business confidence indicators, although they still expect growth of 3% this year.

GDP growth for Q1 2008 was 2.1% on a quarter-on-quarter seasonally adjusted annualised basis, significantly down from the 5.3% growth in Q4 2007. The 2.1% was well below the market consensus of 2.6%, with the mining and manufacturing sectors contributed markedly to the poor GDP growth figure.

- I-Net Bridge