The South African economy grew more than expected at the end of last year as agriculture and trade recovered, data showed yesterday – boosting its chances of avoiding a potentially debilitating credit ratings downgrade.
The easing of a drought boosted the above-forecast rise in GDP in the fourth quarter.
However, economists said Cyril Ramaphosa’s election as leader of the ANC late in the quarter, and as president last month, had raised expectations that the country would make economic reforms and possibly keep its last investment grade rating.
The economy grew 3.1% in the fourth quarter compared with the previous quarter – putting growth for the year at 1.3%. It beat the Treasury’s and other forecasts. Compared with a year earlier‚ gross domestic product increased 1.5% in the fourth quarter of last year. The Treasury had expected growth of 1%.
The largest positive growth contributor was the remarkable recovery in the agriculture‚ forestry and fisheries sector‚ which rose 37.5% and contributed 0.8 of a percentage point to GDP growth.
The trade‚ catering and accommodation industry grew 4.8% and contributed 0.6 of a percentage point.
The primary sector (which includes agriculture and mining) increased by 4.9%‚ the secondary sector (manufacturing‚ electricity and construction) grew by 3.1% and the tertiary sector (trade‚ transport‚ finance‚ government and personal services) grew by 2.7% compared with the third quarter.
This signals that the country’s economy is poised for a recovery.
It is a vast improvement on the dismal 0.3% GDP growth achieved in 2016 but still remains weak by the country’s historic standards.
In the third quarter‚ the economy grew by 2% quarter on quarter‚ demonstrating a resilience that suggested it was in better shape than most economists had previously thought.
Expenditure on real GDP increased by 3.1% in the fourth quarter of last year, while final consumption expenditure by general government grew by 1.3%.
The Treasury is forecasting growth to rise to 1.5% this year on political and policy certainty‚ renewed confidence and rising private fixed investment.
Finance Minister Nhlanhla Nene said on Monday it was likely the growth forecasts would be revised upwards due to improved confidence.
Growth for 2016 was revised up to 0.6% from 0.3%. Third-quarter GDP growth last year was revised higher‚ from 2% to 2.3%.
The revisions indicate that South Africa was not actually plunged into a recession last year. A recession is based on two consecutive quarters of negative growth.