04 Dec South Africa lifts itself out of recession as economy grows in Q3
South Africa’s economy grew by 2.2% in the third quarter of 2018, thus lifting the country out of recession after recording a 0.4% contraction in the previous quarter of the year.
Latest quarterly data revealed that manufacturing and agriculture were key contributors to South Africa’s better than expected performance. The industries grew by 7.5% and 6.5% respectively.
This positive performance is a welcome boost for President Cyril Ramaphosa and his pledge to jumpstart the economy after years of stagnation. The economic growth will also allay fears of further credit downgrades, following warnings from international credit agencies.
However, South Africa’s mining sector took another volatile turn, contracting by 8.8% after lifting itself out of recession in the previous quarter of 2018.
There are also dark clouds forming in the power sector, with beleaguered national utility Eskom recently implementing a sixth day of controlled power cuts. Eskom’s latest load shedding procedures have evoked fears of the blackouts that reduced South Africa’s GDP by 1% a decade ago.
“In all, the data confirms our view that the South African economy is recovering,” said chief Africa economist at Standard Chartered Razia Khan. “Renewed load shedding is a source of downside risk.”