South Africa’s real GDP relapsed in the final quarter of 2022, contracting by a worse than expected 5% (q/q saar) after having recorded a respectable 7.4% q/q growth in the third quarter. Load-shedding intensification was mainly to blame, which disrupted production and output in most sectors. Seven of the ten major sectors contracted over the quarter. The interest rate forecast risk has escalated materially in mid-May due to the sharp depreciation of the rand that has aggravated the upside inflation risk. Even before the recent rand decline, the MPC accelerated its pace of rate hikes with a 50bps increase of the repo rate at the end of March. A deterioration in the inflation outlook on the back of a sustained weakening in the rand, underpins expectations that the SARB could again hike more aggressively than previously anticipated, with another 50bps increase a distinct possibility.
Subscribers to EasyData can download the complete report in PDF format on www.easydata.co.za.