Emerging Markets Weekly by Lloyds TSB

South African economic growth is forecast to have moderated to 2.6% (saar) in Q3 from 3.2% in Q2. The expected slowing in activity reflects a contraction in manufacturing production and an easing in service sector growth, which were boosted by the World Cup. South African economic growth is forecast to have moderated to 2.6% (saar) in Q3 from 3.2% in Q2. The expected slowing in activity reflects a contraction in manufacturing production and an easing in service sector growth, which were boosted by the World Cup. However, despite industrial action, the mining sector is expected to contribute to growth after contracting in Q2. Also out this week, we expect consumer prices to record another modest monthly increase of 0.1% in October, to be 3.3% higher than a year ago, up from 3.2% in September. Helped by a stronger rand, we believe the immediate inflation outlook remains relatively benign. Nonetheless, the trough in prices is nigh, as higher electricity tariffs and food prices should see a modest acceleration in inflation over the next six-months.

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