South African economy likely to expand 0.9 pct in 2017, 1.9 pct in 2018 – Danske Bank

The South African economy continues to experience a modest rebound. The economic growth had come in at 0.8 percent year-on-year in the third quarter, in line with consensus. The recovery is mostly driven by agriculture, which is rebounding from a severe drought, and also by mining. But services and manufacturing sector activity continues to be subdued. The recovery in the economy comes in the midst of rebounding sentiment among corporates and households.

But retail sales growth decelerated to 3.2 percent in October from an average of more than 5 percent in the second quarter, indicating towards weaker consumption growth in the fourth quarter. Even if the PMI has risen, the indicator continues to be below the 50 benchmark. However, leading indicators pain a slightly brighter picture, noted Danske Bank in a research report.

The change in ANC leadership will result in stronger growth prospects for the South African economy. Concrete policy changes will have to be observed to assess the growth impact. According to Danske Bank, the South African economy is expected to expand 0.9 percent this year. The economic growth is likely to accelerate to 1.9 percent and 2.2 percent in 2018 and 2019, respectively, added Danske Bank.

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