For a while now, the country has been balancing precariously on the edge of a recession.
Experts recently weighed in on some of the biggest risks to our country, and many of them, like the threat of corruption and upcoming macro-economic developments, could impact the economy in negative ways.
Then, we got some good news yesterday, with the country managing to dodge the recession, as SA’s economic growth rebounded in the second quarter up 3,1%, and 0,9% for the year to June 2019.
BusinessTech has more on how we bounced back:
According to Maarten Ackerman, chief economist and advisory partner at Citadel, it is comforting to see that South Africa has avoided a technical recession – but most interesting is to note the severe impact that load shedding can have on the country.
“We had significant load shedding in the first quarter of this year and almost nothing in the second quarter, and the impact is clearly visible,” he noted.
“At the same time, the global environment stabilised somewhat in the second quarter of this year, resulting in better performance from exports, as well as mining and manufacturing, with less disruptive strikes from especially the mining sector as seen in the previous quarter.”
BusinessTech and Citadel looked into the latest GDP data, and the wider economic context of the country, and compiled four reasons to be hopeful about South Africa’s economy.
Strong Recovery In Some Sectors
The mining industry did particularly well over the last while, with a growth of 14,4% in the second quarter.
“This figure reflects the fact that the global economy stabilised after a difficult first quarter, as well as the fact that South Africa was able to avoid load shedding, and fewer strikes in the sector,” it said.
Manufacturing also really surprised to the upside, printing growth of 2.1% for the quarter, it noted.
Overall, the manufacturing sector is still struggling a bit and had to shed a number of jobs over the last year, but things are looking up.
Strong Capex Growth
Can I get a “whoop whoop” for the 6,1% growth in gross fixed capital formation (GFCF) seen over the quarter?
This is the first time in the past FIVE quarters that SA has seen a positive GFCF figure.
“Regarded as a leading indicator, GFCF reflects willingness to invest back into the economy by buying capital items such as transport equipment, machinery, building and the like.
“This is a clear indication of positive sentiment and activity that is taking place on the ground. It also dovetails with the uptick we have witnessed in foreign direct investment flowing into the country,” it said.
Consumers Are Consuming Again
That’s you and everyone else out there spending their hard-earned ‘Mandelas’.
On the consumer side, private consumption expenditure is up 2.8% indicating that the consumers are no longer on their knees – “despite high fuel prices, low social grant hikes, a higher VAT rate and high unemployment,” Citadel said.
“This growth in consumption has, amazingly, come largely from sales of durable goods with semi-durables being second in line followed by non-durables and services. This points to a slightly better environment for the consumer as well.
Growth is always good, people.
Good Things Going Forward
Growth might be slow, but it’s happening, and that’s what counts.
This low growth will add to the challenges faced by the fiscus and South Africa in general, but overall, the latest GDP figures definitely indicate that there is still some life left in the economy, the group said.
“If we can continue to build momentum through implementing the right policies, the next three to five years could look significantly better. But, given the immediate structural issues, the road to recovery will remain volatile,” Citadel said.
So, chin up and keep on keeping on.
It’s been one of those weeks that tests the fortitude of every South African. These numbers don’t change that, but at least it’s something.
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