Economists revise growth outlook down

South Africa is heading into 2013 with an economic outlook that remains uncertain and even somewhat bleak. “The global economy is the key vulnerability,” said Nedbank economist, Busisiwe Radebe. “The approaching US ‘fiscal cliff’ poses a significant threat, while the severe fiscal squeeze in much of the Eurozone will either extend the current recession or at best produce very weak growth rates in 2013. Consequently, the private sector will be very reluctant to expand capacity. As a result, fixed investment spending by the private sector is likely to remain weak well into 2013.” Nedbank has maintained its GDP growth forecast of 2.5% for 2012, but revised its growth projection for 2013 down to around 2.5% from the previously expected 2.7%. Export performance, said Radebe, would possibly remain lacklustre on the back of an unfavourable global environment, while imports would continue to benefit from demand for capital goods related to the public sector infrastructure expansion programme. “We expect the current account deficit to widen to 6.1% of GDP for 2012 as a whole from 3.3% in 2011.” Saijil Singh, lead analyst for international credit insurer Coface, said they expected GDP growth for the full year of 2012 to be marginally lower than the 2.5% originally projected. “Since the start of the global recession in 2008, the South African government has been striving to promote the recovery of the economy. It is expected that South African economic growth will reach just below 3% at year-end 2013. Overall, the economy is performing within expectations,” he said. “The local economic outlook, however, remains bleak, with exports hurt by weaker global demand and domestic spending likely to moderate on weaker consumer confidence. This does not bode well for employment creation by the private sector, with firms likely to be more cautious in expanding capacity in the months ahead.” Both Radebe and Singh said the wildcat strikes, especially in the mining sector, combined with softer global demand had resulted in much slower GDP growth in the third quarter of 2012. A sentiment shared by the Reserve Bank that also revised its growth forecasts down to 2.5% (from 2.6%) for 2012, 2.9% (from 3.4%) for 2013 and 3.6% (from 3.8%) for 2014.