Economy: This week's data to show if South Africa is in recession


Statistics South Africa is expected to release second-quarter growth figures on Tuesday as most economists expect gross domestic product (GDP) to have remained essentially flat in the April to June period, possibly growing around 0.8%, quarter on quarter. It is expected the data will reveal whether the economy is in recession.

The economy shrank 0.6% in first three months of the year and strikes in the platinum and steel sectors likely keep growth subdued through the second and third quarters of 2014.

In June, the World Bank cut South Africa’s growth forecast for this year to 2% from an earlier forecast of 2.7%. The South African Reserve Bank cut its economic forecast for this year to 2.1% from 2.6% previously.

Mining and retail figures for June, released this month, were seen to be the make-or-break data that would indicate negative or positive growth for the second quarter. Real retail sales contracted 0.3% on a quarterly basis during the second quarter, compared to growth of 2.1% in the first quarter.

Mining production rose 0.1% on a quarterly basis, with volumes decreasing 5.7% in June, compared to a fall of 6.4% in May.

Strikes, constrained electricity supply and relatively soft growth in key export destinations acted together to depress GDP growth in the first half. At the start of the second half period, a recovery was compromised by the steel and engineering sector strike.

In addition, indications from the Eurozone suggest its growth will falter in the third quarter, while China’s efforts to rebalance its economy are expected to produce a slower growth trajectory.

The producer price index for last month, to be released on Thursday, is set to contract to 7.9% from 8.1% in the previous quarter. Growth in private sector credit extension for last month, to be released on Friday, is likely to lift to an annual 9.3% from 8.7% previously, with a boost mainly from low statistical base factors.

South Africa’s trade account, to be released on Friday, is likely to register another small deficit of R2.5bn last month compared to the R200m deficit recorded in June. The main driver is higher imports.