South Africas growth under pressure

Last week, Africa's two largest economies, South Africa and Nigeria, published their Q2 15 GDP growth data, and it came as no surprise that growth weakened further. However, what was surprising perhaps was the magnitude of weakening. The unsupportive global environment, combined with domestic challenges such as the ongoing energy shortages in both countries, hampered growth considerably. 

In South Africa, GDP contracted by 1.3% q/q saar, a lot worse than expected. Broadly, the surprise quarterly fall in GDP reflects the effects of electricity constraints, a drought and an increasingly strained consumer. Looking at the underlying sub-sectors, manufacturing, mining and agriculture were the main drivers of the weak GDP print, subtracting a combined 1.8pp from the final growth rate. Meanwhile, the effects of an increasingly embattled consumer were also evident in the data as the trade (wholesale, retail, hotels and restaurants) sector's GVA contracted by 0.4% q/q saar after a modest bounce in Q1, notes Barclays.