South Africa’s lopsided economic recovery

South Africa’s economy continued to pick-up in the middle of Q3 but the recovery is taking place at different speeds across sectors; lower inflation is supporting consumer-facing sectors but industry is lagging behind. As the drag from supply-side constraints continues to fade and the SARB delivers further interest rate cuts, the recovery is likely to broaden out. We expect fairly solid growth over the coming quarters, at least by South Africa’s standards, but it will be constrained by tight fiscal policy.