In a week of bumper economic data releases, the focus will be on GDP growth when Stats SA releases first-quarter 2022 GDP data on Tuesday.
The market consensus forecast is for 1.7% growth, in line with the Reserve Bank’s outlook for 2022, which was revised down in May from 2% in March. PwC’s projections remain positive and closer to market expectations at 1.8% while FNB's GDP projections are in line with market expectations at 1.7%.
FNB said one of the reasons for its downward revision is the gradual removal of monetary policy stimulus, which will weigh on consumers as debt service costs increase from 2021’s low levels. This will affect expenditure-side GDP.
Investec’s Lara Hodes said the reason its prediction is below the market consensus is largely supply chain bottlenecks triggered by the pandemic. Hodes said it expects the domestic manufacturing sector to contract 3.6% year on year in April, after March’s 0.8% year-on-year decline.
The March decline was underpinned by production hindrances caused largely by the flooding in KwaZulu-Natal and heightened rotational load-shedding.
“Similarly, mining production is likely to have fallen notably on an annual basis by about 10.8% year on year, after March’s -9.3% year-on-year plunge, with logistical constraints weighing on export potential,” Hodes said.
The SA Chamber of Commerce and Industry (Sacci) will release its business confidence index (BCI) for May on Wednesday. After indicating a faster recovery in January and February as the effects of the Covid-19 pandemic eased, SA business confidence slowed in March as the Russian invasion of Ukraine added to global business uncertainty.
The BCI declined to 95.6 in March from 96.9 the previous month, after improving by 2.8 index points between January and February. However, the general trend in business confidence during the first few months of 2022 remained positive.
Sacci CEO Alan Mukoki warned that the war, sanctions on Russia, supply chain disruptions, geopolitics and local socioeconomic unrest will continue to interfere with economic activity and feed into price volatility. This contributes to and worsens commodity and financial market uncertainty and volatility. In addition, the rising cost of living and higher interest rates could dampen trading conditions, Mukoki said.
The Reserve Bank will on Thursday publish current account data for the first quarter of this year. The current account recorded a surplus of R120bn in the fourth quarter of 2021, falling from a surplus of R216bn in the third quarter.
The trade balance on goods also posted a surplus of R324bn, 5.1% of GDP, falling from R439bn (7% of GDP), reflecting the moderation in commodity prices towards the end of 2021 and explaining the narrowing in the current account.
FNB economists expect the current account to have improved in the first quarter of this year, on higher terms of trade. “We will have to see whether growth disruptions related to geopolitical tensions occur, affecting both export and import volumes — the latter more affected by the rising cost of living,” FNB chief economist Mamello Matikinca-Ngwenya said.
Mining production and manufacturing data for April will also be published on Thursday. Total mining output was materially down by 9.3% year on year in March after falling 5.8% year on year in February. Mining production is expected to decline by at least 3.2% year on year. FNB estimates the mining sector’s GDP would have shaved off about 0.1 percentage points from real GDP growth in the first quarter.
Total manufacturing output declined a marginal 0.8% year on year in March, after growth of 0.7% in February.
FNB said the manufacturing sector probably contributed about 0.6 percentage points to first-quarter GDP growth, which would more than counteract the negative contribution from the mining sector.
Correction: June 7 2022
An earlier version of this article incorrectly said FNB expected SA's GDP to grow 1.1% in 2022, when FNB had forecast 1.7% growth.
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