The South African economy avoided a recession in Q2 and grew by +0.8% q/q, but its GDP is still below the level in Q3 2018. The main rationale behind this positive performance in Q2 was a recovery of those sectors that were most impacted in Q1 2019. Household consumption recovered (+0.7% q/q in Q2 after -0.1% in Q1) after power cuts affected household spending in Q1. Mining activity was also among the sectors to recover in Q2, after three quarters of contraction. For the months to come, we expect South African growth to experience new short-lived boom-bust cycles and the average to be very weak. Growth for all of 2019 is forecast at +0.5%, not enough to cope with population growth and to change the job market situation (the unemployment rate rose to 29% in Q2). Public finances should remain under pressure as a result of low growth and SOE debt problems. The fiscal deficit is forecast to deteriorate to -5% of GDP in 2019, putting pressure on the ZAR while the risk of a recession risk will persist for a long time.
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Weekly Export Risk Outlook 4 September 2019