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Has SA entered technical recession? It may be close call, says FNB

Sep 03 2018 06:45

A mine worker stirs molten gold in a furnace before casting. T ransfer pricing and profit shifting by multinationals inside and outside SA compromises empowerment partners, workers, communities and the country’s economy (Simon Dawson / Bloomberg / Getty Images)

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South Africa will learn Tuesday whether the country has entered a technical recession when Stats SA releases real gross domestic product figures for the second quarter of the year. 

In early June Stats SA announced that SA's GDP had contracted by 2.2%. Economists view two successive quarters of negative economic growth as a technical recession. 

Another quarter of negative growth would come as knock to President Cyril Ramaphosa's plan to ignite the country's economy and grow jobs by attracting billions of rands in foreign direct investment. 

Stats SA will release the GDP figures starting at 11:30 in Pretoria on Tuesday. 

Mamello Matikinca, Chief Economist at FNB, says that while the bank believes SA will stave off a technical recession, it will be a 'close call'. 

"Data suggests that the economy expanded by 0.5% quarter on quarter seasonally adjusted and annualised, but we caution that there is high, two-way forecast risk depending on whether there are any revisions to the first quarter data," she says.

The broad-based economic weakness suggests that our growth forecast for this year may well be too optimistic, as the growth required in the third and fourth quarter to achieve it will be a very tall order."

According to the latest estimate from the SA Reserve Bank, the country's GDP growth will average 1.2% in 2018. 

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fnb  |  stats sa  |  cyril ramaphosa  |  gdp growth


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