South Africa's economy surpassed expectations, registering a 2.2% Gross Domestic Product increase in the third quarter of 2018. The country is officially out of a technical recession!
South Africa is officially out of a technical recession after a GDP increase of 2.2% in the third quarter of 2018. This brings an end to the country's second recession after 1994, an impressive record on its own. The climb out of negative territory was mainly driven by contributions from the manufacturing, transport, finance and business services. The South African economy had contracted by 2.6% in the first quarter and 0.4% in the second quarter. While all pointers suggested the economy would escape the recession, the 2.2% has surpassed just about everyone's expectations. A Bloomberg survey had projected a possible growth of 1.9% while other analysts were even more conservative with their optimism, projecting a safe 1.5%. However, the phoenix rises yet again and it rises with a vengeance.
The manufacturing industry expanded by 7.5% in the third quarter on the back of increased production of basic iron and steel, metal products and machinery; wood and paper; petroleum products; and motor vehicles. According to StatsSA, "This is the biggest jump in manufacturing production since the second quarter of 2016."
The finance, real estate, and business services industries registered an increase of 2.3% while the transport, storage and communication industry grew by 5.7%. The 5.7% increase for the transport industry is the largest quarter increase for the industry since the third quarter of 2007. It should also be noted that the industry was recovering from a contraction in the second quarter. Agriculture expanded by 6.5% in the third quarter recovering from a two-quarter slump. Trade, catering, and accommodation increased in output by 3.2%. Mining, however, registered a decrease of 8.8% attributed to decreased production in platinum group metals, iron ore, gold, copper and nickel. The construction industry saw a 2.7% decrease while electricity, gas, and water also decreased by 0.9%. There is still a lot of work to be done but overall, the results are promising. South Africa is on its way back.
Header Image Credit: Biznis SA
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