GDP contraction a worry for investors
South African investors should be concerned about the stagnant economic growth which also has an adverse impact on business confidence, an economist said on Tuesday.
This comes after South Africa’s gross domestic product (GDP) growth rate slowed to 0.2 percent in the third quarter, recording a significant decline from 3.3 percent in the second quarter of this year.
David Crosoer, executive of research and investments at PPS Investments, said the latest GDP figures were disappointing.
“The latest disappointing quarterly GDP number of 0.2 percent quarter-on-quarter reminded investors that a lot of work still needs to be done to restore investor confidence, notwithstanding the decision by all three ratings agencies recently not to downgrade South Africa to sub-investment grade,” Crosoer said.
South Africa also survived a junk status credit rating from Standard and Poor’s, Fitch, as well as Moody’s rating agencies although the country has been put one notch above investment grade.
“Unless our economic growth surprises significantly on the upside in future, we still face difficult choices as a nation to bring our overall debt levels to a more sustainable basis,” Crosoer said.
Statistics South Africa revealed that four industries — agriculture, forestry and fishing; manufacturing; electricity, gas and water; and trade, catering and accommodation — contributed in the GDP contraction in the third quarter between July and September.
StatsSA said the agriculture, forestry and fishing industry had been in decline for seven consecutive quarters.
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