World Economy

South Africa’s GDP Beat Expectations Over Agro Recovery

South Africa’s economy is poised for a recovery.South Africa’s economy is poised for a recovery.

South African economic growth accelerated for the first year in four in 2017 as agricultural output surged following a recovery in output after the worst drought in more than a decade.

Gross domestic product expanded 1.3% last year, more than National Treasury’s forecast of 1%. Political and policy instability that hurt investor confidence in 2016 continued in 2017, curbing the recovery in Africa’s most-industrialized economy and prompting both S&P Global Ratings and Fitch Ratings Ltd. to cut the nation’s debt to junk. The outlook improved in December, when the ruling party elected a new leader who promised to tackle graft, Bloomberg reported.

The economy grew an annualized 3.1% in the fourth quarter from the previous three months compared with a revised 2.3% expansion in the prior quarter, Pretoria-based Statistics South Africa said in a statement. The median estimate of 14 economists surveyed by Bloomberg was for growth of 1.8%.

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. The outlook for 2018 is improving.

Business confidence climbed to the strongest since October 2015 in January, having fallen to a three-decade low in August. The purchasing managers’ index was above 50 in February, indicating expansion in the manufacturing industry.

South Africa’s economy could expand 1.5% this year, the National Treasury said on Feb. 21. Growth will probably accelerate to 2.1% in 2020 as measures aimed at creating policy certainty and attracting investment pay off, it said.

Finance minister Nhlanhla Nene said on Monday that it was likely that the growth forecasts would be revised upwards due to improved business and investor confidence.

The revisions indicate that South Africa wasn’t actually plunged into a recession last year. A recession is based on two consecutive quarters of negative growth.

Add new comment

Read our comment policy before posting your viewpoints