JOHANNESBURG - The 2017 gross domestic product (GDP) data on Tuesday is the biggest data release next week, but there will also be some important data releases that will show how 2018 started.
The January mining data will show the industry performed at the start of this year after a very positive Mining Indaba held in Cape Town at the beginning of February. The South African Chamber of Commerce and Industry (SACCI) Business Confidence Index (BCI) will also help to show how economic indicators have reacted in February. The BCI will be released on Wednesday and the mining production data on Thursday, while February tractor sales and bulk export volumes have no fixed release date.
The first major data point is the 2017 GDP data.
This will show whether former finance miinister Malusi Gigaba was correct in increasing the Treasury forecast for 2017 to 1.0percent from the October 2017 projection of 0.7percent. Monthly data released so far for the fourth quarter seems to indicate that if anything, the 1percent forecast may be too conservative, as real retail sales were up by 5.6percent year-on-year (y/y) and surged by 9.3percent quarter-on-quarter (q/q) on a seasonally adjusted annualised (saa) basis in the fourth quarter. Last month the Treasury increased the GDP growth forecast for this year to 1.5percent this year compared with a 1.1percent growth forecast made in October 2017.
The higher the 2017 GDP growth rate, the more likely it is that we meet or exceed the 2018 GDP growth forecast.
The second major data point is the SACCI BCI. This is a composite index of various sub-indices such as the value of the rand, import and export volumes and other indicators. The BCI rose to 99.7 in January from 96.4 in December, 95.1 in November and a further rise is anticipated for February.
Mining production on the other hand could disappoint despite the positive mood at the Mining Indaba. Mining production fell by 6.5percent q/q on a saa basis in the fourth quarter, but rose by 4.0percent in 2017. The R27 billion foreign trade deficit was due in part to a R23.5 billion monthly drop in exports of which mineral products fell by R5.9 billion.
South Africa's bulk export volumes are released by Transnet National Ports Authority (TNPA). This is one of many non-Statistics South Africa data points that help to provide colour to what is happening with the economy. South African bulk export volumes rose by 4.9percent in 2017 to a new record of 171.3 million tons (Mt) after falling by 2.8percent in 2016 to 163.3 Mt. The record bulk exports confirm that the South African economy has exited recession and is on its way to surprising most economists with its renewed vigour.
The February data should be more normal as January’s 88.8percent y/y surge to a new record monthly volume of 25.4 million tons was in some respect due to the fact that some exporter clerks went on early Christmas leave so they did not do the December paper work and caught up in January.
Tractor sales rose by 8.7percent in 2017 to 6 362 units. This followed a 11.3percent fall in 2016 when drought conditions prevailed in the summer rainfall area. The 2017 annual total was boosted by a late surge as December sales increased by 19.8percent y/y following a 24.9percent y/y jump in November. The strong gains in the last two months in 2017 should carry over into 2018 and the year did start out with a 10.3percent y/y gain in January. Another y/y increase is expected in February.