The economic outlook for South Africa for the first half of the year was "bleak", with economic growth coming very close to a recession, if the country did not actually slip into a recession, economists said on Thursday.
Fanie Joubert, an economist at the Efficient Group said he expected the average economic growth for 2009 to be between 0,5% and 1%.
"Whether we will go into a contraction is still uncertain, but we expect it to be very close," he commented, adding that the second quarter of 2009 would likely see negative growth.
A recession occurs when a country's gross domestic product (GDP) shows negative growth for two consecutive quarters.
Chris Hart, an economist at Investment Solutions South Africa, agrees that South Africa would come close to entering a recession or would go into recession with GDP growth for the first two quarters expected to be zero or low.
However, Hart expected South Africa's GDP to grow by between 1% and 1,5% for the year as a whole.
Nevertheless, both economists expected the country's GDP to start improving in the second half of the year.
Meanwhile, the strength of South Africa's economy would be on the "right side of the average", compared with what the rest of the world was experiencing, said Hart.
He noted that South Africa's economic strength would be mildly positive for the year as a whole.
Joubert, too, asserted that South Africa was still holding out relatively well, compared with many other countries that had already gone into recession.
"Within the GDP data, there are a lot of sectors that are still going relatively strongly. At this stage, those sectors are supporting us," he commented.
He added that the finance, real estate, business services, and the construction, transport, storage and communications sectors, as well as the agriculture sectors were still, at this stage, doing relatively well.
Hart expected the agriculture and gold sectors to do well throughout the year, while the telecommunications sector would experience mild growth at the beginning of the year, which would strengthen throughout the year.
Further, Hart asserted that retailing would start to pick up again in 2009, with vehicle sales possibly coming "back in the black" on a year-on-year basis.
He explained that this increase in vehicle sales would, however, be off a low base.
Meanwhile, the construction sector was likely to enter a recession for a "brief period" between the second quarter and the fourth quarter, while the financial sector would also come under pressure.
Manufacturing was also likely to struggle for the most part of 2009, but would start picking up again from the fourth quarter onwards.
Official manufacturing statistics for the November quarter, released on Thursday, showed that South Africa's output had dipped for the second consecutive month. Highlighting the strain on factories and consumers, manufacturing production fell by 4,4% year-on-year.
The platinum sector would also struggle, said Hart, although the platinum price would start to show a reasonable level of recovery.
This year would be a setback in terms of unemployment, commented Hart, noting, however, that it would not be a great setback.
The biggest number of job losses would occur in the first half of the year, especially the first few months, but job losses would start "tailing off" by the second quarter.
Hart expected job creation to be neutral in the third quarter, with the situation improving mildly by the fourth quarter.
"I suspect by the second half of next year, we will actually have an economy that is generating jobs quite strongly again," he asserted.
Meanwhile, neither Hart nor Joubert expected the upcoming national election to lead to big changes in South Africa's economic policy.
However, Hart noted that the biggest risk to an election taking place during times when jobs were being cut, was that politicians had a greater tendency to promise things that were beyond the affordability of taxpayers.
This was, however, not only the case in South Africa, but in any country holding an election during tough financial times.
Further, Joubert noted that while government would try to increase their spending on social development during this time, they would be limited in terms of financing, given the tough economic conditions.