Summer Rain Hints at GDP’s Green Shoots

Dear Clients/Investors

The economy has endured severe shocks in the past few years.  At last, however, the business cycle appears to be bottoming out amid expectations that SA will enjoy better growth and lower inflation in 2017.

The Reuters consensus is for real GDP growth to recover, from about 0.4% in 2016, to 1.1% in 2017 and 1.8% in 2018.  This improvement hinges on the expectation that the waning drought will cause food inflation to fall, dragging headline consumer price inflation lower.

“The increase in summer rainfall suggests that SA should experience a very welcome improvement in the agricultural season ahead,” said Stanlib economist Kevin Lings.

The other prop to growth is likely to be found in firmer commodity prices, which would feed into better export prospects, provided global growth is maintained. 

Prices are expected to keep firming into the New Year.

Also encouraging is that SA’s leading economic indicator has risen in three out of the past four months, pointing towards firming rather than falling growth in 2017.

Should the state move more decisively on structural reforms, the pace of growth could surprise on the upside.

Our offices will be closed from the 23rd of December 2016 and will open on the 3rd of January 2017.

We wish you a Blessed Christmas & a Prosperous New Year.

Friendly greetings

Andre Delport