Johannesburg - South Africa has narrowly missed entering a recession in the third quarter of the year as the economy gained 0.7 percent.
This is according to Statistics SA’s third quarter report on gross domestic production (GDP) growth, which notes seasonally adjusted and annualised real gross domestic production at market prices had gained 0.7 percent.
In the second quarter of the year, South Africa’s economy contracted 1.3 percent, causing some analysts and economists to suggest the economy was heading for, or was already in, a structural recession.
Two consecutive quarters of negative growth show the country is in economic decline. Investec chief economist Annabel Bishop had expected SA to narrowly avoid going into a recession.
The South African Reserve Bank has recently trimmed its growth expectations form 1.5 percent to 1.4 percent for this year. This is below National Treasury’s expectation of the economy growing at 1.5 percent this year before reaching 2.8 percent in 2018.
Stats SA’s Tuesday release notes the largest contributions to the quarter-on-quarter growth of 0.7 percent was the embattled manufacturing industry, which contributed 0.8 of a percentage point based on growth of 6.2 percent; finance, real estate and business services, which contributed 0.6 of a percentage point based on growth of 2.8 percent as well as the wholesale, retail and motor trade; catering and accommodation industry, which contributed 0.3 of a percentage point based on growth of 2.5 per cent.
However, it notes, economic activity in the manufacturing industry reflected positive growth of 6.2 percent due to higher
production in petroleum, chemical products, rubber and plastic products; wood and wood products, paper, publishing and printing; and food and beverages.
Economic activity in finance, real estate and business services reflected positive growth of 2.8 percent thanks to increased activities in financial markets and the banking sector.
Stats SA added the growth in the wholesale, retail and motor trade; catering and accommodation industry was mainly due to increases in turnover in the wholesale and retail trade divisions.
Yet, it said, economic activity in the mining and quarrying industry reflected negative growth of 9.8 percent because of lower production in the mining of coal; mining of other metal ores (including platinum) and mining of other mining and quarrying (including diamonds).
The mining sector has been under sever strain recently as commodity prices in key metals such as gold and platinum continue to hover at multi-year lows.
Economic activity in the agriculture, forestry and fishing industry reflected negative growth of 12.6 percent due to decreases in the production of field crops.
This situation has been brought about by El Niño, which has led to a drought and several water shortages across SA’s farming regions, with many farmers being forced to cull cattle and facing the threat of bankruptcy.
Year-on-year, the unadjusted real GDP at market prices increased by a percent.
IOL