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The SA Daily 25 September 2018

Clues to growth in H2:18

  • Q2:18 GDP being weaker than expected saw us trim our full-year forecast for 2018 to 0.9% from 1.2%. Disappointing growth this year comes from various headwinds such as the sharp deterioration in the terms of trade, persistent policy uncertainty, the less benign global economic setting, and likely significant government underspending on infrastructure.
  • Growth data at the beginning of H2:18 so far has been a mixed bag: a disappointing contraction in mining production; a quite strong bounce in manufacturing production; and a marginally positive trend in July’s real retail sales.
  • We now look to the SARB leading indicator this morning for indications on growth for H2:18. Encouragingly, the indicator accelerated in June (5.9% y/y). If sustained, that would bode well for growth in H2:18.
  • Some select factors should support growth momentum in H2:18, such as the delayed government wage settlement, a recovery in agricultural production, and no further decline in the terms of trade.

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