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Robust Q2 GDP data, but outlook far from certain

08 September 2021 Carmen Nel, Economist and Macro Strategist at Matrix Fund Managers
Carmen Nel, Economist and Macro Strategist at Matrix Fund Managers

Carmen Nel, Economist and Macro Strategist at Matrix Fund Managers

The second GDP print was relatively robust, with the 1.2% quarter-on-quarter rate close to 5.0% on an annualised basis. The impetus was reasonably broadly based, with improving mobility during the quarter contributing to the consumption.

There was also a modest pick-up in fixed investment. Inventories continue to be drawn down, which could be due to the spill-over of global supply disruptions or some scepticism about the strength of the domestic consumer.

It is important to remember that this data is already three months old and policy makers and markets will be more focused on the evolution of more timely indicators.

The July social unrest seems to have had a sharp, but short impact, with the PMI rebounding. This bodes well for short-term momentum. However, the global economy is losing some steam, which could be a headwind in the short term.

The data has probably done enough to lead to GDP forecast upgrades, albeit modestly, but the outlook remains highly uncertain, with much work still needing to be done to make up the employment gap caused by the Covid lockdowns.

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