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The SA Daily 06 March 2018

Drought a risk to Q4:17 GDP

Elna Moolman

  • We see Q4:17 GDP growth, due out today, as having moderated to 1.7% q/q (saar), from 2% q/q in Q3:17, which implies a 2017 growth rate of 0.9% y/y. A key forecast risk to the Q4:17 projection is the agricultural sector which posted a strong recovery in Q1:17-Q3:17 after a three-year national drought.
  • With real GDP in the sector by Q3:17 already around 5% higher than the peak before the drought, and 25% higher than the recent trough, the recovery is arguably largely over though, especially given the growing adverse impact of the Western Cape (WC) drought.
  • We still expect economic growth of 1.5% in 2018 (after incorporating a modest negative impact to account for the WC drought impact) but we will closely monitor developments (see Macro Weekly of 4 March 2018, by Elna Moolman).

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