South Africa: recession and he said, she said


For those of you who care at all about what’s going on in the world outside of your own country, there are a lot of countries in the throes of economic havoc. So, don’t feel alone; you have plenty of company – South Africa included.

Housing is slowing, unions are on strike and recession is a term on the lips of many.

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But, wait a minute, Lehman Brothers says no so fast — recession is not likely. In a case of dueling analysts and he said, she said, Moody’s has exactly the opposite view.

In response to the bleak SA growth assessment yesterday by ratings agency Moody’s, global analysts Lehman Brothers say they feel it will be “rather difficult” for the country to enter a recession defined as two quarters of contraction in GDP.

They point out that this would relate to non-seasonally adjusted GDP.

Moody’s came out with a pretty bleak credit assessment on Tuesday, saying that the economy would most likely be in recession this year, with growth of only 3%. It kept the ratings as they were, note the Lehman Brothers analysts.

South Africa’s real gross domestic product at market prices on a quarter-on-quarter seasonally adjusted annualised basis rose by 2.1% in the first quarter of 2008 from 5.3% in the fourth quarter of 2007.

This was the lowest growth since the third quarter of 2001, when the seasonally adjusted real GDP was 1.1%.

Non-seasonally adjusted year-on-year GDP in the first quarter, however, was placed at 4.0% from 4.6% in the fourth quarter.

Fin24, 9 Jul 2008

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It’s only a matter of time before we can determine who’s right, but I have my money on Moody’s.

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