SA has exited from recession in the third quarter of this year partly supported by an improvement in manufacturing activity and by the retail and wholesale trade sectors, data was expected to show this week.
Economists are forecasting an expansion of at least 0.5% for the third quarter compared to a contraction of 0.7% in the second quarter and after growth was negative 2.6% in the first quarter.
Citadel chief economist Maarten Ackerman said the mining sector had had a difficult quarter and was likely to contribute negatively to GDP.
But manufacturing and retail were positive. "It seems consumers are not down on their knees," he said.
He expects GDP growth of less than 1% for the third quarter. Trading Economics has forecast 0.5% against a survey consensus of 0.6%. Absa Capital has forecast 1.5%.
Agriculture, however, had been the "swing factor over the past couple of quarters" and in the first half of the year the sector performance had been weaker due to base factors, Ackerman said.
Last year, agriculture ended the year stronger due to a bumper maize harvest, which significantly boosted GDP. But Ackerman said recent results from agricultural companies had shown farmers were planting less due to concerns over higher input costs and property rights under the government's unfolding land-reform programme.
"I don't think agriculture is going to shoot out the lights to the upside . if agriculture is another deep negative then it's easier for us to get a much lower positive or even negative," Ackerman said.
He added that, though a positive print for GDP would mean SA was technically out of recession, "there's downside risk more than upside risk. So there is a chance that we might see another negative quarter, which shows that the economy remains in recession".
The annual GDP print for 2018 is under pressure as there are few indicators suggesting third-quarter growth will be strong.
Retail sales, an indicator of growth, are improving, though at a slow pace. The most recent data for September showed sales growth of 0.7%, which was lower than the consensus of 1.9% among economists polled by Bloomberg. Furniture retailers recorded the best annual growth of 10.9%.
Lester Davids, a trading desk analyst at Unum Capital, said consumers had come under pressure due to the VAT hike, higher fuel prices and the effects of a weaker rand on the economy this year. However, the lower end of the retail market was growing, with Pepkor, for example, recording growth of 7.2% in clothing and general merchandise sales. But he added: "Some retailers are taking strain on the higher end."
Davids cited a 3.3% decline in Woolworths' fashion, beauty and home section while Bidvest's luxury-car segment was also taking strain.
Dennis Dykes, Nedbank chief economist, said other sectors, including electricity and water, transport, finance and the government, were expected to show moderate growth. There was, however, a question mark over the construction industry.
Nedbank expects 0.5% growth for the quarter year on year and 0.6% for 2018 overall. The Reserve Bank forecasts 0.7%.
However, the economy is unlikely to significantly improve growth until after next year's elections, when investors hope for better policy certainty. The Treasury forecasts that SA will begin to see annual growth at the level of 2% from 2020 onwards.
Dykes said SA's average growth had languished under 1% "over the past few years", which is weaker than the 2.5% to 3% the economy managed during sanctions in the mid-1980s. "It really has been quite unusual and exceptional that the economy has been this weak," he said, adding that SA had the potential to grow by at least 3.5% annually. But higher electricity costs and compliance costs were other factors hampering growth.
"Until we address the investment and business climate, I'm not sure we are going to see growth coming back that quickly. There might be some cyclical reasons forthcoming but we are not going to go back to that 5.5% growth rate that we saw from about 2003 to about 2007," Dykes said.
speckmana@tisoblackstar.co.za..