# ECONOMIC WEEK AHEAD: Another recession is on the cards for SA

- Link: https://dearsouthafrica.co.za/2020/03/02/economic-week-ahead-another-recession-is-on-the-cards-for-sa/
- Published: 2020-03-02T14:13:37+02:00
- Author: dearSA

![](https://cdn.dearsouthafrica.co.za/wp-content/uploads/2020/03/20191141/unnamed-
1.jpg "3D render illustration, red arrow crashes through the ground")

### Economists forecast GDP contraction of 0.2% for the fourth quarter of 2019

The state of the economy will be at the forefront this week, with some economists
forecasting that SA may have slid into another recession.

Stats SA is expected to release the GDP print for the fourth quarter of 2019 on 
Tuesday. A contraction of 0.2%  is the median forecast among 12 economists polled
by Bloomberg. The economy, which the Reserve Bank expects to have grown by only 
0.4% in 2019, shrunk 0.6% in the third quarter, its second contraction in 2019. 
The most recent time SA entered a recession was in the second quarter of 2018.

The persistence of load-shedding and the government’s battle to curb its debt and
bring in revenue have worsened concern that the local economy could go further in
its downward trajectory.

“We expect those sectors that are inextricably linked to load-shedding — such as
utilities, manufacturing and even transport via crucial supply chain networks — 
to underperform,” FNB economists said in a note.

“Based on the high-frequency data from Stats SA, gold mining production on a sequential
basis may well prevent the mining sector from being a detractor from economic growth
in the quarter. Overall, economic growth remains lacklustre and only structural 
reform will be able to lift potential growth meaningfully over time.”

**Lowered expectations**

International bodies, including ratings agency Moody’s Investors Service, have slashed
SA’s economic growth forecast for 2020. Moody’s recently lowered its outlook for
SA from 1% to 0.7%, citing load-shedding and weak domestic demand as crucial issues.
The ratings agency is expected to give a credit ratings review on SA in March, which
could cause SA to lose its last remaining investment-grade rating.

The IMF and the World Bank have also lowered their growth expectations for SA to
below 1%.

The IMF has warned that the coronavirus outbreak poses a threat to the recovery 
of the global economy. The number of cases reported worldwide had climbed to more
than 85,000 by Sunday.

On the back of a grim domestic economy, conditions in the  manufacturing sector 
are expected to have declined in February. The estimate among economists polled 
by Bloomberg is for the Absa manufacturing purchasing managers’ index (PMI) to have
declined to 45.1 index points in February from 45.2 in the previous month. This 
would make it the seventh consecutive decline.

“We expect another contractionary reading in the February release as the sector 
has been marred by intermittent power outages, weak domestic demand and a potential
dampening of export sales amid the coronavirus outbreak,” FNB economists said.

The current account deficit as a percentage of GDP is expected to have narrowed 
further in the fourth quarter after decreasing to 3.7% in the third quarter._

Vehicle sales for February will also be released this week.

[Artice](https://www.businesslive.co.za/bd/economy/2020-03-01-economic-week-ahead-another-recession-is-on-the-cards-for-sa/)
by Business Day

[vc_co