SA will dodge recession, says Reserve Bank
BY NTSAKISI MASWANGANYI: 28 July 2016, 05:38
SA’s economy would have to grow about 1% in the remaining quarters to avoid slipping into a technical recession this year, Reserve Bank deputy governor Daniel Mminele said on Wednesday.
The IMF expects the economy to grow by 0.1% in 2016 but the Bank forecasts zero growth.
“In order to achieve a growth rate of 0%, the economy will need to grow by between 0.8% and 1% in each of the three remaining quarters,” Mminele said at an event in Polokwane.
“For growth to be at 0.5% for 2016, we would require growth of above 2% for the remainder of the year,” he said.
Mminele said “reasonably” positive economic data for the second quarter thus far, in particular mining and manufacturing, were among the reasons the Bank was not expecting a technical recession — defined as two consecutive quarters of economic contraction. The economy contracted by 1.2% in the first quarter of 2016.
Senior economist at the Bureau for Economic Research, Hugo Pienaar, said the country’s economy was likely to have grown by an annualised 2% in the second quarter.
Despite the better outlook for growth in the second quarter, the bureau, however, forecasts the economy to be in recession in 2016 with a 0.2% contraction for the year.
Pienaar expected growth to be under pressure in the second half of the year, with “a high probability” of a technical recession.
Lingering softness in the Chinese economy and the uncertainty created by the UK’s recent decision to leave the EU (Brexit) implied that SA was unlikely to receive much growth support from the rest of the world, Pienaar said.
“Domestically, an expected renewed inflation acceleration in the second half, weak employment growth and low consumer confidence are expected to ensure consumer spending remains under pressure,” Pienaar said.
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