Good recovery data could be an early Christmas present for South Africa

Statistics South Africa is scheduled to launch its GDP numbers for the third quarter on Tuesday (8 December), with analysts hopeful that the data will level to indicators of a powerful rebound after the nation’s coronavirus lockdown.

The Bloomberg market consensus is for a sturdy preliminary rebound of 55% q-o-q (annualised) after the lockdown induced 51% crash in Q2.

Based on present data, Stellenbosch’s Bureau for Economic Research (BER) is way more optimistic and believes that the rebound could be in extra of 60%.

“Based on the high-frequency data available for the third quarter and a number of assumptions on the services sectors, we are much more optimistic with a figure of 64% pencilled in,” it stated in a analysis notice on Monday.

“As in Q2, we acknowledge a large amount of uncertainty surrounding the GDP outcome, including the extent of possible revisions to Q2 that may have spillover effects to the Q3 print.”

However, the BER stated that relying on the power of the Q3 final result, it’s more likely to lead to forecast revisions for the full-year GDP contraction in 2020.

Another launch that’s more likely to entice some consideration this week is the Q3 present account stability.

“Based on the large trade surpluses achieved in recent months, the consensus is for a blockbuster current account surplus of 3.7% of GDP after a 2.4% of GDP deficit during Q2,” the BER stated.

“If such a large surplus is achieved, or especially if it is even larger than expected, it is likely to add fuel to the fire of those investors who have turned more positive on the rand exchange rate, at least versus a weakening US dollar.”

In forex markets, the rand trade rate has continued to strengthen from the earlier week amid a weaker greenback and improved international danger urge for food for higher-yielding rising markets.

However, the native forex misplaced notable floor towards the euro and to a lesser extent the pound. This emphasises the influence of a weaker US greenback within the latest buoyant rand efficiency, the BER stated.

On Monday, the rand began the day at R15.24 to the greenback, R18.47 to the euro and R20.44 to the pound.

Read: How Covid-19 will influence December depart for employees in South Africa


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