Manufacturing production rebounds, IMF revises SA economic growth upward to 5%
Manufacturing production rose by 7,6% in August, compared to the -8.4% contraction in July due to South Africa's civil unrest.
That was preceded by a -0,5% contraction in June.
Statistics South Africa released the latest manufacturing production data on Tuesday.
Year on year, manufacturing production in August was up 1,8%.
#Manufacturing production increased by 7,6% m/m in August. This followed m/m changes of -8,4% in July and -0,5% in June. Production was up 1,8% y/y in August.— Stats SA (@StatsSA) October 12, 2021
Listen here for more: https://t.co/UKNSVBGUne#StatsSA pic.twitter.com/jJOYTBeld8
On Tuesday the International Monetary Fund also announced a revision upwards for South Africa's growth outlook from 4% to 5%.
The global growth outlook was revised downwards from 6% to 5.9% in its annual World Economic Outlook report.
Bruce Whitfield discussed these stats with Professor Adrian Saville, Investment Specialist at Genera Capital, who says a 5% recovery in our economy this year is indeed feasible.
It's helped by the base effect - think of a springboard pushed down in 2020 because of the lockdown and the repressive economic circumstance and as those circumstances have been eased you get a bounce back. So you're coming off a low base... a 'dead cat bounce'.Prof. Adrian Saville, Investment Specialist - Genera Capital
Wonderful as this sounds, it does not mean that South Africa will recover to pre-Covid levels by 2022 Whitfield points out, as things will slow down in 2022 and 2023.
If you drop something from high enough it will bounce, and that's what happened with the South African economy contracting substantially (with the rest of the world) in 2020. So a lot of this 5% rebound means clawing its way back to where it was.Prof. Adrian Saville, Investment Specialist - Genera Capital
To put it simply: 100 minus 7% (the contraction in 2020) leaves you with 93. If you grow 93 by 5% it doesn't get you back to 100, so we need to grow much more.Prof. Adrian Saville, Investment Specialist - Genera Capital
By our calculations I think you're looking at 2023 or even 2024 before the South African economy is back where it was pre-Covid.Prof. Adrian Saville, Investment Specialist - Genera Capital
We can expect the slowdown in 2023 and 2024 because after the 5% rebound we're back in the business of "ordinary" structural growth he says.
Listen to Prof. Saville's insights on The Money Show:
Source : EWN