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
|