Political will needed to maintain SA's growth momentum - poll

South Africa’s economy expanded 2.0% quarter-on-quarter on a seasonally adjusted annual rate in the third quarter as agriculture improved again.

ANC president Jacob Zuma. Picture: EWN

JOHANNESBURG - South Africa’s economy needs political support to maintain upward momentum into next year, a Reuters poll found on Monday, just days before a conference of the ruling African National Congress (ANC).

Medians in the poll of 26 economists, surveyed by Reuters last week, suggested the economy will grow 1.2% next year after expanding 0.9% in 2017.

This year’s estimate is 0.2 percentage points higher than last month’s poll after the economy grew more than expected last quarter.

South Africa’s economy expanded 2.0% quarter-on-quarter on a seasonally adjusted annual rate in the third quarter as agriculture improved again from a drought while mining and manufacturing also impressed.

To maintain momentum into the new year, a boost to confidence is needed, and that is inextricably linked to politics, said Kevin Lings, chief economist at Stanlib.

The economy outperformed last quarter because agriculture picked up where it left off before the drought.

The ANC is due to pick a successor to President Jacob Zuma in its conference that begins on Saturday and finishes on 20 December.

Deputy president Cyril Ramaphosa got the majority of nominations to become ANC party leader, but the complexity of the leadership race means it’s far from certain he will win and therefore become the likely next president.

“If we have a better political outcome next year, irrespective of who wins in December, we could lift the growth rate to 2.0%, that is entirely possible, but that does require a boost from where we are,” said Lings.

Still, only one economist forecast 2.0 growth next year, the most bullish expectation. The most bearish was 0.9%.

The survey also showed there is 30% chance the South African Reserve Bank will change rates at its January meeting.

Rates are expected to remain on hold at 6.75% through to mid-2019 at least. Last month’s poll had predicted a cut to 6.50% in early 2019.

Risks that have changed the rates outlook on the horizon are the ANC conference, the value of the rand considering the potential of further credit downgrades, higher oil prices and electricity costs.