CAPE TOWN – South Africa now has slightly better chance of avoiding a sovereign debt rating downgrade when Moody’s reviews the economy in November.
This means that the country has avoided a technical recession – typically defined by two consecutive quarters of negative growth, said Carl Coetzee, the chief executive of bond originator BetterBond.
Moody’s is the only one of the top three agencies to still award SA an investment-grade rating, and losing that would be an automatic signal for institutional investors to withdraw billions of rand from South African markets.
Statistician-General Risenga Maluleke revealed on Tuesday that South Africa’s gross domestic product (GDP) increased by 3.1 percent in the second quarter of 2019, from a revised 3.1 percent in the first quarter.
Risenga said several industries that had contributed positively to the growth, such as finance, real estate and business services increased by 4.1 percent and increased economic activity was reported for financial intermediation, real estate activities and business services.
The trade, catering and accommodation industry increased by 3.9 percent, due to increased economic activity that was reported in all trade divisions except the food and beverages major group.
The mining and quarrying industry, statistics revealed, increased by 14.4 percent and contributed a 1 percentage point to the GDP growth.
“Increased production was reported for mining of iron ore, manganese ore, coal and other metal ores including platinum,” said Risenga.
Coetzee said the StatsSA figures showed that the finance, real estate and business services sector grew 4.1 percent in the second quarter, and was the second-biggest contributor to overall GDP growth.
“What is more, we have already seen the real estate market continuing to grow in the third quarter and are confident that it will improve further in the coming summer sales season, because owning a home is still a major aspiration for a large percentage of SA’s population,” he said.
The unadjusted real GDP at market prices for the first six months of 2019 increased by 0.4% compared with the first six months of 2018.