After a higher-than-expected GDP figure of 3.1% for Q2 2019, South Africa’s economy is likely to slow in the third quarter.
This is according to BankservAfrica’s monthly economic transactions index, which fell even after July’s figures were revised slightly upwards following the lower than expected inflation and producer prices.
“The August BETI comes as South Africa’s GDP figures for the second quarter of 2019 turned positive, which the BETI predicted it would,” said Mike Schussler, Chief Economist at Economists.co.za.
“However, the data strongly suggests third-quarter growth will be softer. The August BETI and slow July and June show that the second quarter was more of a ‘bounce’.”
The BETI, which has been showing a fragile economy over the last five years, now shows a very stagnant economy, said Schussler.
“The economic transaction trend does not reveal a recession but rather a flat or declining economy.
“One must remember that we have one more month for the third quarter data, and that leads and lags can influence the relationship between the BETI and GDP growth.”
The current data for the quarter gives less optimism for another quarter of a 3% GDP increase.
Taken together with new vehicle sales and the Absa Purchasing Managers’ Index, as well as subdued inflation and declining interest rates, all indications point to an economy that is not yet in a recovery mode, said Schussler.
“There seems to be growth for one or two quarters and then a fall back into a decline for a quarter. The economy’s potential has been underperforming for a very long time with the downswing lasting for 68 months now.”