26 August 2015
The South African economy has contracted twice this year with massive hits to the mining and manufacturing sectors caused largely by strike action and erratic electricity supply.
Agriculture has also suffered due to drought conditions in 2015.
There appears to be a much more broad based weakness in the economy with implications for coming quarters.
“Two sectors experienced serial quarterly declines namely agriculture (drought) and manufacturing. The latter suffered substantial supply side pressures (electricity constraint), factory specific strains (oil refinery maintenance) and intense foreign competition (steel industry especially)”, said economist Cees Bruggemans.
Three more sectors experienced 2Q15 output declines (electricity, mining and the trades – retail, wholesale, motor). The first two of these may not have been surprises, but the trades going negative sends its own signal.
“The South African GDP averaged +1.6% growth year on year so far in 2015. The second half of 2015 may be even weaker if mining continues to struggle and the trades ease some more as households turn yet more cautious.
It makes for a full year outlook of 1 %-1.5 % GDP growth at most,” added Bruggemans.
The best performing sector in the second quarter remained finance with +3 % growth.