SOUTH Africa’s gross domestic product (GDP) growth for the third quarter of this year was 2% – well above market expectations of 1.7%.
The largest positive contributor was the agriculture, forestry and fishing sector, which grew by a whopping 44.2%. But the reality is that the overall economy is still growing far too slowly for the country to meet the targets of the National Development Plan, which needs at least 5% annual growth. Further, the 2% growth was below the 2.8% recorded in the previous (second) quarter.
In the third quarter, six of the 10 sectors registered growth, with agriculture, mining and manufacturing performing the best. According to Statistics South Africa latest data, year-on-year the economy grew by 0.8% and for the nine months by 1%. Presenting his first GDP growth numbers since took over from Pali Lehohla, the new statistician-general, Resenga Maluleke, said: “Over time we have seen ups and downs of GDP growth numbers.
“In agriculture, the increase was largely driven by production of field crops as well as products in the horticulture environment,” Maluleke said. Maluleke said the primary sector leveraged the highest growth, followed by the secondary sector, but he was reluctant to say whether the figures signalled improvement in the economy.
Nedbank senior economist Isaac Matshego said the economic recovery continued at a moderate pace in the third quarter and, in terms of the outlook, growth is forecast to weaken further in the final quarter. “Weak government finances, the sovereign risk ratings downgrades and heightened political tensions ahead of next week’s ANC elective conference weigh on confidence. “We are forecasting GDP growth of about 0.9% for 2017 as a whole,” Matshego said.
However, Matshego said improved global and firmer international commodity prices next year should help the local economy, driving production and exports in both the mining and manufacturing sectors. Azar Jammine, chief economist at Econometrix, calculated that given better than expected numbers, it is likely that growth for this year could surprise on the upside.
“The third quarter numbers came better than expected, and the growth rate for this year could be better than anticipated,” Jammine said. Kamilla Kaplan, group economist at Investec, said, “In the first three quarters of the year, growth averaged 1% year-on-year and is likely to record a similar outcome for the full year.”