Johannesburg - South Africa’s economy, the continent’s second-largest, expanded in the third quarter, avoiding a second recession in six years.
Gross domestic product increased an annualised 0.7 percent in the three months through September compared with the previous quarter, when it shrank 1.3 percent, the statistics office said in a report released on Tuesday in the capital, Pretoria. The median of 18 economists surveyed by Bloomberg was 1 percent growth.
The rebound in output last quarter masks a deterioration in the economy this year triggered by power shortages and a slump in prices of platinum, copper and other commodities.
The economy is forecast by the central bank to expand 1.4 percent this year, which would be the slowest pace since the 2009 recession.
The recovery “does come off a low base, so it’s nothing to get excited about,” Nicky Weimar, an economist at Nedbank Group in Johannesburg, said by phone before the data was released.
State-owned utility Eskom Holdings implemented 20 days of rolling blackouts in the third quarter, compared with 59 in the preceding three months, curbing factory production. It’s also offset any benefit to exports coming from the rand’s slump to a record low of 14.4410 per dollar this month.
The central bank has little room to support growth as it struggles to keep inflation inside the 3 percent to 6 percent target. The Reserve Bank increased its benchmark repurchase rate by 25 basis points to 6.25 percent on November 19, the second increase this year.
“The domestic economic growth prospects remain subdued amid weak business confidence,” Governor Lesetja Kganyago said last week. “The continuing challenge is for monetary policy to achieve a fine balance between achieving our core mandate of price stability and not undermining short-term growth unduly.”
-With assistance from Simbarashe Gumbo.
BLOOMBERG