The manufacturing sector helps lift SA out of a recession

Marco Green
December 4, 2018

GDP rose 2.2% in the third quarter, data from Statistics SA showed on Tuesday.

The 2.2% growth in the gross domestic product (GDP) in the third quarter - July to September - equates to an annualised 1.1% improvement from a year ago.

President Cyril Ramaphosa's rise to power as head of the ruling party in December last year and then of the country in February initially boosted sentiment and the rand following Jacob Zuma's tenure of nearly nine years.

The rand gained as much as 1.1 percent before paring the advance to trade 0.9 percent up at 13.5655 per dollar by 1 p.m.in Johannesburg, the strongest level in nearly four months. All of the top three ratings firms have cited weak growth as a major threat.

Manufacturing expanded 7.5%, agriculture grew 6.5%.

Even though the primary sector contracted by 5.4% in the quarter - mainly due to a large drop in mining - the agriculture industry rebounded following two quarters of substantial contractions.

A Bloomberg consensus was 1.9%, with all economists polled expecting SA to see growth. Growth for the year, however, will still remain low.

Analysts said they expected the recovery to continue into 2019, but that recent electricity outages by ailing power utility Eskom posed a threat. The GDP measures the total output of the economy. He called the economic slowdown a "transitional issue" from which the economy will soon recover. "Renewed load shedding is a source of downside risk".

"Perceived domestic political and policy uncertainty have been a contributing factor to South Africa's modest economic performance", Investec Bank Ltd economist Kamilla Kaplan said.

Other reports by Click Lancashire

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