SA economy to gather steam next year

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Filomena Scalise

Johannesburg - South Africa's economic growth will accelerate gradually next year, benefiting from an uptick in global demand from its largest trading partners, a Reuters poll showed on Thursday.

The poll of 17 economists, taken in the past week, showed growth will accelerate to 2.8 percent next year.

The outlook for 2015 was upgraded, with growth expected to average 3.4 percent from 3.2 percent in the previous poll.

“We are likely to see a gradual recovery in our major trading partners, being the euro zone and also the US,” said Johannes Khosa, economist at Nedbank.

“That is going to boost our exports, increase employment prospects and domestic demand and help our economy recover.”

Economists trimmed their projection for growth this year, however, to 1.9 percent from 2.0 percent a month ago as labour unrest dented productivity and hampered the economy in the three months to September.

The economy grew 2.5 percent in 2012.

“GDP growth is weak and could come out below the 2.0 percent year-on-year ... if the strike action does not come to a halt,” said Annabel Bishop, chief economist at Investec Securities.

South Africa's economic growth slowed to 0.7 percent in the third quarter of 2013 after expanding by a revised 3.2 percent in the previous three months.

On a year-on-year basis, the economy grew 1.8 percent in the July-September quarter from a revised 2.3 percent in April-June.

Last month, economists trimmed their long term growth forecasts due to high unemployment and slow progress in attracting investment into South Africa.

Gina Schoeman, an economist at Citi, said investors had also started to take into account a certain degree of labour unrest on the production side of the economy as well as infrastructure constraints.

The South African Reserve Bank (SARB) is expected to raise rates by 100 basis points in 2015 from their current 40-year low of 5 percent, the poll showed.

“Inflation will continue to hold a certain degree of upside risk, but the real reason for the rate hikes is simply that right now real rates are negative and the SARB will need to naturalise the rates again,” said Schoeman. - Reuters

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