Consumers warned on GDP, which is ‘all over the place’

As analysts (and the rand) reacted negatively to Statistics SA's announcement of a surprising 0.6% decline in GDP in the third quarter, Mica Townsend, Business Development Manager at 10X Investments, said she was keeping her eyes fixed on the longer-term because short-term volatility tended to cause unnecessary upset.

“There is a lot of pressure on growth and stability in South Africa and internationally and, as a result, things have been very up and down for a while.”

There is little consistency between quarters GDP-wise, Townsend said, pointing to the second-quarter increase of 3,2% after a 3.1% contraction in the three months to March, “which makes it difficult to get a clear picture of where the economy is going”.

“However, what does seem likely is that the manufacturing sector will continue to be depressed going into Q4. The majority of the data released so far, such as the readings from the Absa purchasing managers index (PMI), show that factory activity has slipped month on month and there are weak expectations for a strong Q4 recovery in this area.”

She said it was worth reminding consumers at times like this that the greatest threat to long-term security was short-term behaviour.

“Don’t be too alarmed and risk letting short-term volatility upset your long-term plans.”

Get investment and saving tips straight to your inbox.

Related articles

Get started or switch to 10X today.