ABN - Growth in the mining and manufacturing sectors is set to prevent South Africa from slipping into a recession.
The economy shrank by 0.3% in the final quarter of 2016, however a surprising 4.3% output increase in the mining sector, coupled with a modest 0.3% growth in manufacturing should help the country evade recession.
“The improved mining, growth in agriculture and the improved vehicle sales should keep first quarter GDP growth in positive territory,” said senior economist at Nedbank Nicky Weimar.
Fears of a second successive contraction in the economy were heightened after the recent downgrading of South Africa’s credit rating to junk status, but above-expectations growth in these sectors should prevent a first recession since the financial crisis of 2009.
The national treasury expects the economy to expand by 1.3% this year, although the International Monetary Fund (IMF) estimates South Africa’s growth to reach only 0.8% in 2017.