Published: October 10, 2011
"Risks remain to the downside", says analyst.
Analysts at Bank of America Merrill Lynch have cut their 2012 GDP growth forecast for South Africa to 3.5% from 3.8%, noting that “risks remain to the downside given the global environment”.
In a research note published Monday, the bank’s EEMEA economist Matthew Sharratt wrote that GDP growth is unlikely to improve greatly during the third quarter as a result of strike action that affected manufacturing and mining activity.
However, a recovery in activity into Q4 combined with the weaker Rand could see a rebound in GDP in the final quarter, he added
“Next year, with hopefully some clarity to the Eurozone debt crisis, a recovery in sentiment could see growth in South Africa improve,” Sharratt wrote.
“Still, the outlook is extraordinarily clouded and risks remain to the downside. With around 15% of South Africa’s exports destined for the Eurozone, a further 10% to the US and about 6% to the UK, the domestic economy is clearly exposed to negative external shocks from already weakened economies.”
The bank has also dropped its forecast for 2011 growth to 3.1% from 3.2%.