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| Farmers working in grape farm in Capetown. Credit: Reuters |
South Africa Statistics Office on Tuesday says South Africa’s economy has emerged from a recession in the second
quarter as agriculture helped the economy expand more than expected, strengthening the rand and
bonds.
quarter as agriculture helped the economy expand more than expected, strengthening the rand and
bonds.
Africa’s most industrialised economy
expanded 2.5 percent in the three-months to the end of June after
contracting by 0.6 percent in the first quarter and by 0.3 percent in
the final quarter of 2016.
expanded 2.5 percent in the three-months to the end of June after
contracting by 0.6 percent in the first quarter and by 0.3 percent in
the final quarter of 2016.
The rand firmed
against the dollar in response to the data, and was trading 0.23 percent
firmer at 12.9500/dollar as of 1113 GMT.
against the dollar in response to the data, and was trading 0.23 percent
firmer at 12.9500/dollar as of 1113 GMT.
Government bonds also firmed,
with the benchmark paper down 1.5 basis points to 8.5 percent.
with the benchmark paper down 1.5 basis points to 8.5 percent.
President
Jacob Zuma last month said that 2017 growth would be below 0.5 percent,
down from a forecast of 1.3 percent in February, after the poor first
quarter numbers.
Jacob Zuma last month said that 2017 growth would be below 0.5 percent,
down from a forecast of 1.3 percent in February, after the poor first
quarter numbers.
Low growth has piled pressure
on Zuma, who has been beset by the fallout from credit downgrades and
corruption scandals that have further dented investor confidence.
on Zuma, who has been beset by the fallout from credit downgrades and
corruption scandals that have further dented investor confidence.
Helping
the recovery was growth in agriculture, with the sector expanding 33.6
percent as it recovers from last year’s drought. The other key sectors
of mining, manufacturing and trade also registered growth.
the recovery was growth in agriculture, with the sector expanding 33.6
percent as it recovers from last year’s drought. The other key sectors
of mining, manufacturing and trade also registered growth.
Gross
domestic product rose 1.1 percent on an unadjusted year-on-year basis
in the second quarter, compared with 1.0 percent expansion in the
previous three months, the agency said.
domestic product rose 1.1 percent on an unadjusted year-on-year basis
in the second quarter, compared with 1.0 percent expansion in the
previous three months, the agency said.
Economists
polled by Reuters had expected a quarter-on-quarter GDP expansion of
2.1 percent and a year-on-year expansion of 0.4 percent.
polled by Reuters had expected a quarter-on-quarter GDP expansion of
2.1 percent and a year-on-year expansion of 0.4 percent.
“The
growth rate is not what planners and those in decision making positions
would have wanted. Although its not negative, it is not at the level
(of growth) that was planned for,” said Statistician-General Pali
Lehohla.
growth rate is not what planners and those in decision making positions
would have wanted. Although its not negative, it is not at the level
(of growth) that was planned for,” said Statistician-General Pali
Lehohla.
Since emerging from the 2009
recession, South African growth has fallen short of the government’s 5
percent target that economists say is needed to curb unemployment.
recession, South African growth has fallen short of the government’s 5
percent target that economists say is needed to curb unemployment.
“A
restoration of investor confidence remains important for a sustained
recovery. For now, that is still elusive,” said Standard Chartered
Bank’s Chief Africa Economist Razia Khan.
restoration of investor confidence remains important for a sustained
recovery. For now, that is still elusive,” said Standard Chartered
Bank’s Chief Africa Economist Razia Khan.
“The
Q2 GDP data demonstrates some momentum in the economy, but this is
unlikely to be sufficient to discourage the (central bank) from further
easing in support of the economic recovery.”
Q2 GDP data demonstrates some momentum in the economy, but this is
unlikely to be sufficient to discourage the (central bank) from further
easing in support of the economic recovery.”
The South African
Reserve Bank cut its repo rate by 25 basis points to 6.75 percent in
July for the first time in five years in order to support the economy.
Reserve Bank cut its repo rate by 25 basis points to 6.75 percent in
July for the first time in five years in order to support the economy.
Source: Reuters
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