Economists: Mining, manufacturing outputs a reminder of frail economy
The latest mining and manufacturing output numbers have raised fears that the economy may falter.
JOHANNESBURG - Economists say the latest mining and manufacturing output numbers are a powerful reminder about the fragile state of the economy.
Earlier this week, Statistics South Africa announced the economy avoided a technical recession, thanks to a rebound in mining and manufacturing sectors.
Contraction in activity in the mining and manufacturing sectors have raised concerns that the economy may falter in the third quarter, and increase the likelihood of a credit rating downgrade later this year.
Manufacturing production slowed to 0,4 percent in July, while mining output contracted by 5,4 percent in the same month - both well below market expectations.
But Citibank economist Gina Schoeman says the economy may skip a contraction again in the third quarter, but only by a slight margin.
"While we are likely to escape negative GDP growth in the third quarter, it is very unlikely to be as strong as we saw in the most recent print."
Nedbank economist Isaac Matshego says South Africa has not done enough to avoid a downgrade by ratings agencies later this year.
"These numbers will definitely not help us."
Earlier this week, the Reserve Bank said the current levels of growth were inadequate and needed to be closer to six percent.