South Africa may avert a second recession in consecutive years, but economic growth prospects remain dim.
Monthly data was slightly better in the second quarter following a 3.2% annualized quarter-on-quarter contraction in the gross domestic product in the three months through March. Retail sales were the best performer as its growth exceeded 2% every month in the period, data from Statistics South Africa showed on Wednesday.
While mining output contracted year-on-year every month in the quarter, it rose 14.6% on a quarter-on-quarter seasonally adjusted basis, the measure used to calculate GDP, and should make a positive contribution to economic growth, Lara Hodes, an economist at Investec said in a note last week. Trade, under which retail sales is classified, manufacturing and mining production together make up around 40% of GDP.
The statistics office is scheduled to publish GDP data for the second quarter on September 3. FirstRand Ltd.’s Rand Merchant Bank unit said in a note the quarterly growth rate was likely to be 2.4%.
Last month’s interest-rate cut could provide some stimulus for the rest of the year. While the Reserve Bank said GDP probably rebounded in the second quarter, its forecast of 0.6% will be the slowest full-year growth since 2016.
