EDITORIAL: Growth boost welcome, but …
‘The bad news is that investment spending crashed, which means any growth momentum will struggle to be sustained’
The latest economic growth figures from Statistics SA will provide a brief but welcome boost to the market. But sadly, they are unlikely to signify that the economy is about to pull out of its slump and start generating jobs and improving lives anytime soon. At least the economy is out of recession, as economists define it. After two quarters of negative growth, it not only turned positive in the second quarter of 2017 but beat expectations, growing at 2.5% against the market’s consensus forecast of 2.1% to 2.2%. That’s the quarterly rate, which is flattered by "base effects" — in other words, the previous quarter was so bad that even if the economy had been no worse compared with that, the number would have been neutral to positive. On an annual basis, comparing 2017 with 2016, the growth rate was 1.1%. If it were to be sustained for the full year, SA would be looking at a growth rate better than 2016’s and better than the 0.5% or so that many had forecast. But how likely is that? ...
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