by 3.3% q/q saar from a –1.2% contraction in the first quarter.
There were encouraging rebounds in mining and manufacturing which
expanded 11.8% and 8.1% respectively, but the impact of the prolonged
drought remains evident, with agriculture contracting –0.8%, the sixth
consecutive quarterly pullback, but the sector appears to be turning
the corner.
The construction sector remains very weak, growing just 0.1% in 2Q16
and the outlook remains grim when digging through the gross fixed
capital formation numbers. Government (-8.9%), SOE (-5.4%) and private
business (-3.1%) investment all contracted, collectively delivering a
–4.6% q/q fall in capital investment. The weak investment environment
were reflected in the utilities sector which contracted by –1.8%, the
second consecutive fall.
The tertiary sector held up well in the face of higher inflation and
elevated interest rates with retail growing 1.4%, and finance,
real-estate and business services delivering a respectable 2.9% q/q.
The transport sector also bounced back robustly, growing 2.9% on
better mining and manufacturing volumes. This upturn was also evident
in the 18.1% acceleration in exports which bodes well for the current
account number due in the coming weeks.
Household expenditure, however, remains weak, growing just 1% q/q, and
the 3Q16 GDP number is unlikely to be half as good. That said, 2016
GDP growth could well surprise to the upside but may still not be
enough to avert a sovereign downgrade.
