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The SA Daily 16 August 2018

Retail sales spell increased risk of recession for Q2:18

  • June retail sales have disappointed, at 0.7% y/y, below the Bloomberg expectations of 2.2% y/y, and also well below May’s 1.9% y/y. Consumers have been under strain from higher petrol prices and the weaker rand.
  • Retail sales contracted 0.4% q/q in Q2:18, after contracting 1.5% q/q in Q1:18. The retail sector, which accounts for c.6.3% of GDP, may therefore have contributed negatively to Q2:18 GDP. The positive contribution expected from the mining sector will likely be negated by the retail and manufacturing sectors.
  • The SA economy therefore was most probably stagnant in Q2:18, which raises the spectre of a technical recession for Q2:18 (see June retail sales disappoint of 15 August by Thanda Sithole).

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