Global Courant 2023-05-12 19:45:40
South Africa’s economy likely avoided a technical recession in the first quarter, despite more intense blackouts.
An average estimate by seven economists in a May 5-11 Bloomberg survey expects quarterly gross domestic product growth to be 0.2%, compared to April’s forecast of 0.1%.
However, the BankservAfrica Economic Transactions Index, an early indicator of economic activity, has signaled the likelihood of a negative quarter-on-quarter figure for the first three months of 2023, after GDP rose by 1.3 in the last quarter of last year. % has shrunk.
Better-than-expected manufacturing and mining output likely contributed to growth in the quarter, offsetting negative contributions from new vehicle sales and power generation, Thanda Sithole, senior economist at FirstRand’s First National Bank Senior, said in a research note Thursday. Mining and manufacturing make up more than a fifth of total GDP.
Economists see South Africa staving off technical recession | Core data points to marginal growth in Q1
The statistics bureau is expected to publish the GDP figures for the first quarter on June 6.
Economic growth would have been stronger without the rotational blackouts implemented by the state energy company. Eskom Holdings SOC Ltd. implemented electricity rationing at 89 days in the first quarter, the same as the previous three months, but with a higher intensity. The company, which produces nearly all of South Africa’s electricity, has struggled to meet demand since 2008.
The central bank predicts power cuts will cut 2 percentage points of GDP growth this year and have contributed to the depreciation of the rand, fueling inflation. The currency is down more than 11% in 2023, making it the second worst-performing emerging market currency against the dollar, after the Argentine peso, of currencies tracked by Bloomberg.
The central bank has raised borrowing costs by 425 basis points over the past 18 months to contain inflation, which, at 7.1%, remains above the midpoint of 4.5% of the target range at which it prefers to anchor price growth expectations. It predicts that headline inflation will remain high and will not reach the middle of the target range until 2025.
The average estimate of 14 economists in the study is that the central bank’s monetary policy committee will end the tightening cycle on May 25 with a 25 basis point increase.
Forward rate agreements used to speculate on borrowing costs show traders considering the possibility of an increase of nearly 50 basis points at the MPC meeting in May, and 25 basis points at the next meeting in July.
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