SOUTH AFRICA: GDP Expected to Expand +0.5% Q/Q in Q2

GDP data set for release at 1030BST is expected to show growth slowing on a Y/Y basis to +0.3% (Prev. +0.5%), with quarterly GDP expected at +0.5% (Prev. -0.1%). An in-line reading would mean South Africa avoids entering a technical recession, with growth expected to be buoyed by stronger and more consistent power supplies as well as firmer consumer spending.

• Goldman Sachs note that output likely expanded by +0.7% q/q in Q2 (non-annualized). High-frequency data for the quarter suggest that retail sales, manufacturing and electricity output rebounded, while mining output continued to contract sequentially. They expect continued positive growth in agriculture, after the strong increase in production reported in Q1. On the demand side, Goldman Sachs expect a rebound in domestic demand and a small positive contribution from net exports.
• JP Morgan say GDP likely gained +0.4% q/q in Q2. The manufacturing sector probably provided much of the underpin after a weak Q1. At the same time, mining output probably contracted further. Much of the uncertainty around the GDP forecast centers on the agricultural sector after a leap in output in Q1, JP Morgan note.