According to a Reuters poll released on Thursday 13 Oct., South Africa has little chance of falling into recession next year, with firmer commodity prices, exports and agriculture expected to cushion the economy.
The results suggested the probability of a recession was less than one chance in three, according to the answers to a question, added to a wider survey of 33 economists, taken over the past week.
However, the poll was almost complete when Finance Minister Pravin Gordhan was ordered to appear in court on Nov. 2 to hear fraud charges against him. The rand plunged and South African government bond yields surged after the news.
The survey concluded that South Africa will grow by a median 1.1 percent next year compared with 0.3 percent this year. Both forecasts were unchanged from last month's median.
"We expect a smaller drag from the mining and agricultural sectors on economic growth in the coming year, which should reduce the risk of a recession," said Elna Moolman, an economist at Macquarie.
The South African economy grew just 1.3 percent last year, and the government is under pressure from ratings agencies to generate more growth to help fund its large budget deficit.
"Prospects of unchanged interest rates and some moderate fuel price changes for the remainder of the year could support the consumer," said Thea Fourie, senior economist at HIS Markit.
Fourie added that the risk of labour strikes had subsided and South Africa should see some improved agricultural production in the 2016/2017 farming season.
Dam levels have fallen to 53 percent as an El Nino weather pattern triggered droughts across southern Africa and placed millions at risk of food shortages. That weather pattern ended in May.
Source: timeslive.co.za/reuters.com
