Economists upbeat about GDP figures

South Africa eased out of its first recession in 17 years during the third quarter of last year.

"We expecting it to be quite better at 2.6% quarter-on-quarter seasonally adjusted and annualised," said Nedbank economist Carmen Altenkirch on Monday.

South Africa's GDP for the third quarter of 2009 increased by 0.9%.

Altenkirch said the manufacturing sector is likely to favourably contribute to GDP.

"The sector has improved over several months as a result of pick up of demand globally. There has also been improvement in the construction sector," she said.

Investment Solutions senior economist Chris Hart told BuaNews: "We are definitely looking at an improvement although not much but things like mining should experience some growth. Manufacturing is still in the doldrums particularly with vehicles."

Standard Bank is expecting a 3.2% quarter-on-quarter improvement. "This is due to the upside result of improved manufacturing, electricity consumption and wholesale trade data," said economist Danelee van Dyk.

The economists however cautioned that recovery of the country's economy will be slow.

Additional to the GDP figures, Stats SA will release the Consumer Price Index (CPI) for January on Wednesday, 24 February 2010.

In December, CPI, which is used to measure inflation, came in at 6.3%. "We expect it to stay above 6% with the contributors still being base effects from last year and the strength of the Rand," said Hart.

Standard Bank is forecasting inflation to come in at 6.4%.

"It will increase marginally higher due to technical base effects but it should return to the target by March," she said, adding that food inflation played a key role in keeping inflation low and that it is likely to continue doing so for the rest of the year.

Commenting on the Reserve Bank's Monetary Policy Committee next month, van Dyk said the GDP figures will have no bearing on the central bank's decision regarding rates unless if the economy performs badly.

"It will have no bearing on the MPC other than confirm that the economy is turning around. Economic growth will have to disappoint for the bank to cut rates further," she said.

Standard Bank expects the central bank to cut rates again by 50 basis points only in November.