South Africa emerged from its first recession in almost a decade in the third quarter as recoveries in manufacturing and agriculture contributed to an increase in economic growth.
Gross domestic product rose by an annualized 2.2 percent in the three months through September compared with a revised 0.4 percent contraction in the prior quarter, Statistics South Africa said Tuesday in the capital, Pretoria. The median estimate of conomists surveyed by Bloomberg was for growth of 1.9 percent.
The rand gained as much as 1.1 percent before paring the advance to trade 0.9 percent up at 13.5655 per dollar by 1 p.m. in Johannesburg, the strongest level in almost four months. Yields on benchmark government bonds dropped and stocks reversed losses.
Bloomberg, however, said its unnamed economist said the consumption-heavy configuration of the expansion brings doubts over how sustainable the recovery is.
“We were cautious about the prospects for capital investment but the 5.1 percent contraction in the third quarter was a weaker print than expected. This bears evidence that the boost in business confidence earlier this year has yet to translate into spending decisions. We expect this to remain the case in 2019, with the likely result being the economic recovery stalling as the expansion in private consumption weakens”, the economist said.
Frontpage October 20, 2020