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The SA Daily 09 December 2019

Ongoing output weakness

  • Manufacturing and mining production data this week will shed light on the SA economy as at the start of 4Q19. Manufacturing and mining both declined in 3Q19 by respectively 3.9% q/q and 6.1% q/q (seasonally adjusted and annualised); this detracted a combined 1.0 percentage point from GDP growth.
  • Manufacturing production likely contracted 2.6% y/y (0.2%m/m) in October, after contracting 2.4% y/y (2.4% m/m) in September; mining production likely contracted 2.3% y/y in October, after 0.2% y/y growth in September.
  • SA manufacturing and mining are being constrained by slowing growth in SA’s major trading partners, higher electricity costs, and unstable power supply.
  • With ongoing weakness in SA’s production sectors, GDP growth risks are therefore skewed to the downside.
  • A rebound in 4Q19 GDP growth would be required to achieve our 0.4% GDP growth forecast for 2019 — however, 0.4% still significantly undershoots population growth.

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