South Africa: Economy swings to expansion in Q3

In the third quarter, the economy expanded 0.7% over the previous quarter at a seasonally adjusted annualized rate (SAAR). The reading contrasted the 1.3% contraction seen in the second quarter and undershot the 1.1% expansion the markets had expected. In annual terms, GDP expanded 1.0% in Q3, which came in below the 1.3% expansion recorded in the previous quarter.

Q3’s rebound came on the back of an expansion in manufacturing, which increased 6.2% in the third quarter. The figure contrasted the 6.3% contraction observed in the second quarter and marked the best result in three quarters. Moreover, agriculture, forestry and fishing contracted 12.6%, which represented a milder drop compared to the 19.7% decrease tallied in Q2. Conversely, mining and quarrying deteriorated in the third quarter and contracted 9.8% (Q2: -6.4% quarter-on-quarter SAAR).

The Central Bank expects the economy to expand 1.5% in 2015 and 1.6% in 2016. FocusEconomics panelists project the economy to grow 1.5% in 2015, which is unchanged from last month’s estimate. For 2016, panelists expect the economy to grow 1.7%, which is down 0.1 percentage points from last month’s estimate.