South Africa GDP Growth Slows as Weak Confidence Hurts Trade
(Bloomberg) -- South Africa’s economic growth eased in the third quarter as confidence in the continent’s most-industrialized nation struggles to gain traction after its second recession in almost a decade.
Gross domestic product increased an annualized 2 percent in the third quarter compared with a 2.8 percent expansion in the previous three months, the statistics office said in a report released on Tuesday in the capital, Pretoria. The median estimate was for 1.7 percent growth.
Slack consumer demand and domestic political turmoil have weighed on the economy, battering business and consumer confidence. S&P Global Ratings cut the nation’s rand debt to junk on Nov. 24, saying that public finances had deteriorated with no prospect of immediate improvement. Moody’s Investors Service kept the assessment at the lowest investment grade, but put it on review for downgrade.
Highlights from the release include the following:
- The economy expanded 0.8 percent from a year earlier
- Fixed investment grew an annualized 4.3 percent in the quarter
- Agriculture climbed 44 percent, while manufacturing grew 4.3 percent
- Trade contracted an annualized 0.4 percent in the quarter
- Government services decreased an annualized 0.7 percent, the third quarter of contraction
The central bank held its key rate at 6.75 percent Nov. 23 and warned that uncertainty about South Africa’s credit rating and the outcome of the ruling African National Congress’s leadership race this month raised risks. The Monetary Policy Committee raised its growth forecast for 2017 to 0.7 percent. It sees GDP expanding 1.2 percent next year and 1.5 percent in 2019.
“We don’t see per-capita income growth moving into positive territory before 2019,” Tatiana Lysenko, a senior economist at S&P, said in an interview in London “The fiscal position has also deteriorated beyond our expectations. As a result, our growth projections are 0.7 percent for 2017 and 1 percent for next year.”
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