South Africa’s economy could expand by an annualized 45.2% in the third quarter, according to central bank forecasts.
The monetary policy committee used that estimate for the quarterly change in gross domestic product at its meeting Thursday, when it left the benchmark interest rate unchanged, the Pretoria-based Reserve Bank said in an emailed response to questions.
It will be the biggest quarterly increase in at least 30 years and follows a record annualized quarter-on-quarter contraction of 51% in the three months through June. The median estimate of 26 economists in a Bloomberg survey is for an expansion of 35.3% in the third quarter.
A nationwide lockdown that’s been in place for six months pushed Africa’s most-industrialized economy into its longest recession in 28 years. The restrictions were gradually eased from May 1, allowing the phased reopening of some businesses and sectors, and will move to the lowest alert level 1 next week, with international borders re-opening on Oct. 1.
While there is “a lot of uncertainty about the recovery” and progression of the coronavirus pandemic, the central bank’s latest forecasts “incorporated the right assumption” about the move to lockdown alert level 1, it said.
The inflation-targeting bank halted its easing cycle even as it announced lower full-year GDP and price-growth forecasts. The impact of the 300 basis points of rate cuts in 2020 has yet to filter through to the economy, Governor Lesetja Kganyago said. That’s because it happened in quick succession and the transmission was slow because of lockdown restrictions that halted most economic activity.
The central bank sees the economy contracting by 8.2% this year. The median estimate in a Bloomberg survey is for an 8.5% decline.