Factories save economy, just

2015-12-02 06:00

SOUTH Africa narrowly avoided a recession after the economy grew in the third quarter of 2015.

Statistics SA data released on Tuesday showed that GDP grew 0,7% in the three months to September 30. Three months before that, the economy had declined by 1,3%.

Two successive quarters of economic decline mean that the economy is in a recession.

When the economy declined in the second quarter, many economists predicted that it would also contract in the third quarter. But a recovery in the manufacturing sector helped the economy grow in the third quarter.

Nevertheless, the 0,7% growth in GDP indicates an economy that remains in stress.

FNB Household and Property Sector Strategist John Loos said a technical recession was narrowly averted.

But, if one viewed the statistics on a year-on-year basis, rather than quarter-on-quarter, the figure “is the slowest year-on-year growth since the final quarter of 2009,” he said.

The weakest industries were agriculture, with a year-on-year decline of 16,2%, and electricity and water, with a year-on-year decline of 2,7%.

Economists.co.za chief economist and director Mike Schussler warned that the drought, low commodity prices and visa restrictions could shift the country into a recession by early next year.

“We got away without a recession this time around … another [negative growth] quarter would have technically put us into a recession,” he said.

The third-quarter GDP recovery was led by the manufacturing sector, which contributes more than 12% to the economy and grew by 6,2% in the three-month period.

Mining fell by 9,8% while agriculture slid 12,6%.

The only other key sector growing solidly in the third quarter was the finance, real estate and business services sector, said Loos.

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