South Africa’s economy avoided slipping into a recession in the second quarter, as solid growth in the agriculture and financial industries outweighed a hammering in the strike-hit mining sector, data showed today. The country is struggling to right itself after waves of labour unrest this year hit corporate confidence, while rising food and fuel prices have squeezed consumers. The economy grew 0.6% in the second quarter after contracting by the same amount in the first three months of this year, Statistics South Africa said on Tuesday. A Reuters poll of 26 analysts had forecast growth of 0.9%. This was compared to a 0.6% drop in the real gross domestic product (GDP) in the first quarter of the year.
h3. Level of Growth ‘exceptionally low’
On an unadjusted year-on-year basis, the economy grew by 1% in the second quarter, compared with growth of 1.6% in the previous three months. Analysts had expected year-on-year growth of 1.2%. “We should remember the level of growth seen today is exceptionally low and totally insufficient to solve South Africa’s deep developmental and jobs problems,” Peter Attard Montalto, an emerging markets analyst at Nomura International, said in a note to clients.
The main contributors to the increase in the second quarter of 2014 were general government services and the transport, storage, and communications industry, each contributing 0.4 of a percentage point, and finance, real estate and business services with 0.3 of a percentage point.
h3. Mining drops Output by 9.4%
The mining and quarrying industry saw a 9.4% drop in quarter-on-quarter output, the data showed, after being hit by a five-month platinum strike this year. Manufacturing, the economy’s second-largest sector, fell by 2.1% from the previous three months, reflecting weak demand from struggling consumers. Agriculture grew up nearly 5%, while finance and real estate expanded by 1.5%, the data showed.
Nominal GDP at market prices in the second quarter of 2014 was ZAR 891bn, ZAR 17bn more than the first quarter of 2014. The unadjusted real GDP at market prices increased by 1% year-on-year, boosted by government services and transport, storage and communication.