GDP growth, fuel price drop the best Christmas gift for SA workers
CAPE TOWN – South Africa swung back to growth as Statistics SA announced that the country’s gross domestic product (GDP) accelerated by 2.2 percent in the third quarter of 2018, signalling that South Africa has officially exited the technical recession.
Risenga Maluleke, South Africa's statistician-general, said the growth was mainly driven by the manufacturing, transport and finance industries.
The economy fell into its first recession since the 2009 global financial crisis in the second quarter with the economy contracting 0.4 percent in the period following a 2.6 plunge in the first quarter of the year.
Peregrine Treasury Solutions corporate treasury manager, Bianca Botes, said the positive GDP figures secured an upward trend for the rand.
“This was above market expectations of 1.6 percent resulting in a boost in the positive momentum in the rand.
“Shortly after the release, the rand strengthened to R13.58 against the greenback, securing the upward trend of the local currency,” said Botes.
Western Cape Economic Opportunities MEC, Beverley Schäfer, welcomed the news that the country was no longer in recession. Coupled with a decrease in the fuel price this will help consumers and the agricultural sector.
Minister Schäfer said: “the GDP growth recorded in the third quarter is a positive step as weak growth was one of the major risks highlighted by ratings agencies. However, despite this quarter’s growth, experts are still predicting growth of between 0.6 percent and 0.8 percent for this year which is not enough if we want to encourage investment and create jobs.”
Schäfer said this week’s decrease in the fuel price would also positively impact on the economy. “Consumers’ pockets have been hit hard by consecutive fuel price hikes, which have also impacted the cost of transport and food,” she said.
Sharing the sentiment was UASA spokesperson Andre Venter, who said the drop in fuel prices was great news for South Africa’s workers. “After a year of fuel price increases that stretched consumers’ finances to the limit, there is now a December and festive season to look forward to, at least as far as personal transport is concerned.”
Venter said UASA sincerely hoped that retailers and the public transport industry would take workers into consideration and adapt their prices where possible over the festive season; an expensive time for most followed by another month of expenses for parents of school-going children.
“We are also pleased with the Department of Energy’s review of how it calculates the basic fuel price by looking at the underlying prices of fuel, diesel and illuminating paraffin, as well as the possible capping of fuel prices.
“However, the government should also revisit the other three elements that make up the pump cost of fuel, namely the general fuel levy, the road accident fund levy, and distribution, transport and wholesale costs,” said Venter.
BUSINESS REPORT ONLINE