5 reasons the SA economy is out of recession

accreditation

The SA economy has officially emerged from recession, Stats SA announced on Tuesday morning, following a 2.2% rise in GDP growth for the third quarter of the year. 

The economic growth figures were broadly in line with the expectations of economists surveyed by Fin24 prior to publication, who had projected growth rates of between 0.8 and 2.6%.

The rand firmed by as much as 1% shortly after the release of the results.

However, despite the rebound, economists still expect overall GDP growth for the year to be weak, below 1%.

Here's what boosted growth in the third quarter. 

1. Manufacturing industry expands

Growth was mainly driven by the secondary sector, which grew by 4.5%. This was aided by a 7.5% increase in manufacturing. Large contributions came from steel and metals, and motor vehicle production, among other things.

2. Agriculture rebounds

Even though the primary sector contracted by 5.4% in the quarter - mainly due to a large drop in mining -  the agriculture industry rebounded following two quarters of substantial contractions.

During the third quarter, increased production in field crops, horticultural and animal products, helped improve growth to 6.5%. 

Earlier on Tuesday, Bloomberg reported that confidence in the industry had declined to its lowest in nine years. The agribusiness confidence index dropped from 48 to 42, mainly due to concerns over weather conditions and a lack of clarity on land reform policy.

3. Transport industry rebounds

The tertiary sector grew by 2.6% during the 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. 

4. Finance, real estate and business services continue growth trend

Also within the tertiary sector, the finance, real estate and business services industry continued its growth trend, increasing by 2.3% during the quarter. 

Additionally, the trade industry - particularly wholesale, retail and food and beverages - and catering and accommodation increased by 3.2%.

5. Expenditure-led growth

Expenditure GDP grew to 2.3%, following a decline of -2.6% and -0.7% reported in the first and second quarters respectively. Government expenditure grew by 2.2%, while household expenditure grew by 1.6%.

However, gross-fixed capital formation declined -5.1% during the quarter, largely due to a decline in investment in construction works, transport equipment and residential buildings, according to the StatsSA report.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.85
-1.2%
Rand - Pound
20.48
+0.1%
Rand - Euro
17.30
+0.0%
Rand - Aus dollar
11.09
+0.0%
Rand - Yen
0.13
+0.0%
Gold
1,793.05
0.0%
Silver
24.33
0.0%
Palladium
2,023.00
0.0%
Platinum
1,043.50
0.0%
Brent Crude
85.53
+1.1%
Top 40
60,525
+1.7%
All Share
67,051
+1.5%
Resource 10
62,969
+2.5%
Industrial 25
86,659
+1.4%
Financial 15
13,849
+0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Facebook is facing a fresh crisis after a former employee turned whistle-blower leaked internal company research . Do you still use Facebook?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, the benefits outweigh the risk for me
25% - 235 votes
No, I have deleted it
46% - 436 votes
Yes, but I am considering deleting it
29% - 272 votes
Vote