Rand Report- SA GDP

Q3 2018 Gross Domestic Product (GDP) data released from Statssa has shown South Africa to have officially moved out of the technical recession highlighted in Q2 2018.

Real GDP grew by 2.2% quarter on quarter (in Q3 2018), although while the second and tertiary sectors of the economy grew by 4.5% and 2.6% respectively (quarter on quarter), the primary sector contracted by 5.4% quarter on quarter. Nominal GDP for the quarter is estimated at R1.27trillion in the third quarter.

Primary Sector

Within the primary sector, agriculture saw growth of 6.5%, led by increased production in Horticulture, field crops and animal products. The mining sector came under pressure contracting by 8.8% as production in platinum group metals (PGMs), iron ore, gold, copper and nickel decreased.

Secondary Sector

Manufacturing was the most significant contributor to growth within the secondary sector gaining 7.5% in the quarter. Electricity consumption declined by 0.9% and the construction sector contracted by 2.7% in the quarter.

Tertiary sector

The tertiary sector saw the trade, transport, finance, government and personal services divisions managing to grow in the quarter. The transport industry grew 5.7% over the period, boosted by increased activity in freight transport.

The Rand

RR 04122018

Progression in US / China trade talks have seen risk appetite returning and emerging market currencies gaining. Following the (mostly) positive Q3 GDP print, the rand has managed to further outperform its emerging market currency peers, as tabled below.

USD/ZAR – Technical View

RR USDZAR 04122018

The USD/ZAR has continued to decline and is now only a few cents away from our initial downside target of R13.50/$ (as in previous Rand Report). A close below R13.50/$ would call for further downside with R13.10/$ the next support target considered. Traders who are currently short the USD/ZAR currency pair may consider using the dotted trend line as a trailing stop indication.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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