Kicking off the week is the inaugural Africa Climate Summit and Africa Climate Week (ACW) 2023 hosted by the government of Kenya at the Kenyatta International Convention Centre in Nairobi.
ACW is an annual event that brings together leaders from governments, businesses, international organisations and civil society to explore ways to reduce greenhouse gas emissions while adapting to the mounting fallout from the climate crisis.
The Africa Climate Summit aims to address the increasing exposure to climate change and its associated costs, globally and particularly in Africa. The summit will serve as a platform to inform, frame and influence commitments, pledges and outcomes, ultimately leading to the development of the Nairobi Declaration.
On Tuesday, Stats SA will publish GDP data for the second quarter. In the first quarter SA’s economy rose 0.4% quarter on quarter, after a downwardly revised 1.1% decline in the previous quarter, avoiding a technical recession despite record levels of power outages.
Agency data showed eight of the 10 economic activities reported positive growth rates in the first quarter, with manufacturing increasing 1.5% compared with a 1.2% contraction in the fourth quarter. The finance, real estate and business services sector increased 0.6% compared with a 1.6% decline previously, also making a significant contribution to growth.
On the expenditure side, exports were strong in the first quarter, expanding by 4.1%, while imports advanced 4.4%. Government spending rose 1.2% and household consumption went up 0.4%.
Old Mutual Group chief economist Johann Els told Business Day a positive outcome is likely for the second quarter.
“Growth could turn out somewhat stronger than in the first quarter despite lots of uncertainty in sectors where there is not a lot of high-frequency data [agriculture, finance, personal services],” Els said. “I expect 0.7% quarter-on-quarter growth in the second quarter.”
He said a possible range would be between 0.4% and 0.9%.
“While this is admittedly very weak relative to what the country needs, it is a lot better than feared given the severe load-shedding experienced thus far in 2023. I maintain my above-consensus growth forecast of 1.2% for 2023.”
Also on Tuesday, S&P Global will publish its SA purchasing managers’ index (PMI). The index edged down to 48.2 in July from 48.7 previously, reaching its second-lowest level in two years.
The outcome marked the fifth straight month of contraction. The economy-wide PMI has tracked below 50 since March, indicating a challenging operating environment in the private sector.
The Bureau for Economic Research (BER) will publish the third-quarter RMB/BER business confidence index on Wednesday. The index declined for a fifth consecutive quarter to reach 27 in the second quarter of 2023, down by 9 points from 36 in the first quarter.
RMB chief economist Isaah Mhlanga said sentiment deteriorated further due to persistent load-shedding and challenging economic conditions amid rising interest rates and cost pressures.
Index data showed the manufacturing sector remained the most downbeat, with confidence at 17 points, while retail confidence declined 14 points to 20, reflecting pressures on profitability and the worsening of business conditions.
Current account
The Reserve Bank will publish the second-quarter current account of the balance of payments on Thursday.
SA’s current account “surprised” in the first quarter, narrowing by more than expected to R66.2bn, equal to 1% of GDP, from a revised shortfall of R155bn, or 2.3% of GDP, the previous quarter.
The outcome was a result of strong exports, reflecting a wider trade surplus as the value of exports accelerated at a faster pace than that of imports.
While the out-turn was better than the Reuters consensus of 2.7%, Absa economist Sello Sekele said at the time that the current account balance could deteriorate as trade conditions worsen, mainly as a result of falling global and domestic demand.
“We believe that various headwinds will result in some widening in the current account deficit,” Sekele said. “Our rand-denominated export commodity price index for SA is down 4.6% so far in quarter two and is down 12.5% since the start of the year.”
Sekele said persistent infrastructure bottlenecks such as electricity supply, rail and ports will remain binding constraints on export volume growth.
“Against this, we forecast a current account deficit of 2.3% of GDP in quarter two, widening further to 2.5% in the fourth quarter,” he said.
Other data coming out this week is the FNB/BER consumer confidence index and the country’s foreign exchange reserves on Thursday.
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