South Africa’s Economy Emerges From First Recession In Decade
By Olumidagreaton December 4, 2018
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South Africa emerged from its first recession in almost a decade in the third quarter as recoveries in manufacturing and agriculture contributed to an increase in economic growth.
Gross domestic product rose by an annualized 2.2 percent in the three months through September compared with a revised 0.4 percent contraction in the prior quarter, Statistics South Africa said Tuesday in the capital, Pretoria.
The rand added to its early session gains, advancing to a session-best 13.5600 per dollar at 0935 GMT from an open at 13.6150.
The positive data is a boost to President Cyril Ramaphosa, who has pledged to kick-start growth after a decade of stagnation under his predecessor Jacob Zuma.
It will also ease fears of credit downgrades deeper into non-investment following warnings by agencies about the economy. All of the top three ratings firms have cited weak growth as a major threat.
Economists polled by Reuters had predicted a 1.6 expansion for the third quarter.
Manufacturing expanded 7.5 percent, agriculture grew 6.5 percent, while mining showed an 8.8 percent contraction.
Last month the central bank cut its 2018 growth forecast again to 0.6 percent, a touch higher than Treasury’s 0.7 percent forecast in the October budget.
* The biggest drivers of quarterly growth were increases in manufacturing output, which rose 7.5 percent, and agriculture, which surged 6.5 percent.
* Despite the rebound, the underlying economy remains weak, with the central bank and the National Treasury forecasting annual growth of less than 1 percent for the year.
* The economy hasn’t grown by more than 2 percent a year since 2013 and is struggling to gain momentum despite political changes, which boosted investor confidence. Cyril Ramaphosa’s ascent to power — first as leader of the ruling African National Congress in December and as President in February — bolstered sentiment and the rand following Jacob Zuma’s scandal-ridden tenure of almost nine years, but indexes show confidence has waned as businesses seek real reforms.
* The economy expanded 1.1 percent from a year earlier.