SA breaks out of recession

Irving Hamilton
December 4, 2018

Sick and exhausted of living in a recession? Well, Statistics SA has good news for you.

South Africa emerged from its first recession in nearly a decade in the third quarter as recoveries in manufacturing and agriculture contributed to an increase in economic growth.

The rand rose on Tuesday ahead of economic growth data release for the third quarter ended September, amid renewed demand for risk assets as the United States and China agreed to a temporary trade war truce. The median estimate of economists surveyed by Bloomberg was for growth of 1.9 percent.

Eskom implemented a sixth day of controlled power cuts on Tuesday, putting more strain on the economy and raising fears of the blackouts a decade ago that reduced GDP by about 1%.

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Stats SA lumps the following under manufacturing: iron and steel, metal products and machinery, wood, paper and publishing; petroleum, chemical products, rubber and plastic products; and motor vehicles, parts and accessories and other transport equipment.

Agriculture grew by 6.5%, while mining slumped massively by 8.8%. The economy shrank 0.7 percent in the second quarter of the year, following a 2.6 percent contraction in the prior quarter. The transport, storage and communication industry in particular expanded by 5.7%, rebounding from a -4.9% contraction in the second quarter and improving from 0.9% growth reported in the first quarter. "The lift in the third quarter GDP growth momentum is, in the main, expected to have been underpinned by positive growth in the manufacturing and trade sectors", Kaplan said.

Real growth for the year will probably come in at less than 1%.

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