JOHANNESBURG (Reuters) – South Africa’s already recession-hit economy likely suffered its deepest-ever contraction in the second quarter but is set to grow strongly in the third as curbs to contain the coronavirus pandemic ease, a Reuters poll found.
Economists lowered their forecasts again and now expect an annualised 44.5% contraction in the April-June quarter, compared with the median estimate in a July poll for a 38.7% fall.
That would be by far the biggest drop since comparable records began in 1993, the year before South Africa held its first fully democratic elections. Second quarter GDP data is due early next month.
The most pessimistic forecast was for a 53% contraction while even the most optimistic predicted 20% shrinkage.
Growth is seen recovering in the third quarter, although the forecast 18.6% rebound is not as sharp as the 19.3% predicted last month.
JP Morgan wrote that high-frequency data point to a notable recovery of activity in July and August.
However, that will not be enough to offset the previous plunge as coronavirus restrictions closed down swathes of the economy.
The 2020 median outlook for an 8.0% contraction is unchanged from last month’s poll but next year’s rebound has been cut to 3.1% from 3.5%.
“There is higher forecast risk when modelling the sectors for which monthly data is lacking,” Citi economist Gina Schoeman wrote. “We are confident that the agricultural sector will be a lone positive print given that it remained open throughout with fairly good harvests, but this is a small weight in GDP.”
For a graphic on Reuters Poll: South Africa economic growth, inflation and monetary policy outlook:
With the outlook bleak, the South African Reserve Bank is seen keeping interest rates at their current level of 3.50% for much longer than previously thought.
The median of the latest survey suggests no change though 2021 whereas the previous poll pointed to a 25 basis point hike in January or March.
Inflation is expected to remain benign – below the midpoint of the Reserve Bank’s 3-6% comfort level – at an average of 3.1% this year and 4.0% next year.
SARB Governor Lesetja Kganyago said last week that adding unemployment or economic growth to the Bank’s mandate, an additional measure touted by some politicians and labour leaders, would risk policy mistakes and hurting its credibility.
(For other stories from the Reuters global long-term economic outlook polls package:)
(Reporting by Vuyani Ndaba; Additional polling by Khushboo Mittal in Bengaluru; Editing by Kirsten Donovan)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
