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South Africa’s economy gains 3.1% growth in Q22 minutes read

Africa’s second-biggest economy bounced back from its largest quarterly drop in a decade when it contracted 3.1 per cent in Q1

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South Africa's economy gains 3.1% growth in Q2

South Africa’s economy grew 3.1 per cent in the second quarter of 2019 after a sharp slump in the first put it at risk of recession, official figures showed Tuesday.

Africa’s second-biggest economy bounced back from its largest quarterly drop in a decade when it contracted 3.1 per cent in the first three months of 2019.

Stats SA said the recovery was mainly driven by the mining industry, which grew 14.4 per cent — the biggest increase since 2016.

The secondary sector was boosted by manufacturing while growth in the tertiary sector was driven by financial, real estate and business services — South Africa’s single largest industry.

The results are expected to ease pressure on President Cyril Ramaphosa who took office in 2018 on a promise to revive the economy by attracting foreign investment and cracking down on corruption.

But Africa’s most developed economy has been gripped by low growth, mass layoffs and rolling blackouts caused by South Africa’s heavily indebted power company Eskom, which generates around 95 per cent of the country’s electricity.

Unemployment rose to a record 29 per cent this year, with youth joblessness above 50 per cent.

Both the agricultural and construction sectors — which respectively employ around 5.0 and 3.0 per cent of the population — were in recession, said Stats SA.

Growth in the mining sector — fuelled by coal, manganese and iron ore — sits at odds with South Africa’s pledge to peak greenhouse gas emission between 2020 and 2025, which would require a significant reduction in coal-powered stations.  

“South Africa has to work on correlating better GDP figures with unemployment and poverty alleviation,” tweeted political economy analyst Daniel Silke.

“Growth, therefore, needs sustained annual increases of at least 3.0 per cent rather than just one-quarter of recovery from a very low base.”

South Africa’s central bank forecasts economic growth of 1.8 per cent in 2020 and 2.0 per cent in 2021. The 2020 figure was cut to 1.5 per cent by the International Monetary Fund earlier this year, hindering Ramaphosa’s bid to attract investors.

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South Africa Unions Reject Government Plan to Review Pay

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The South African labour unions have rejected a government proposal to review planned increases for civil servants days before they were due to be implemented.


The Public Servants Association, which represents 230,000 government workers, says the state has asked to review the last leg of a three-year pay agreement because it couldn’t afford it.


The Public Servants Association says the timing of the proposal, a few days before the adjustments were due to be implemented, speaks of a government that regards public servants as an easy target to resolve its financial woes.


The Central Executive Committee of the Congress of South African Trade Unions, the country’s biggest labor federation, says if the proposal made its way into the budget speech it will be seen as a declaration of war.

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South Africa Raises $1.1 Billion Bailout for Ailing Airways

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South Africa has almost doubled its funding for the national airline to 16.4 billion rand ($1.1 billion), cash which will go towards supporting a restructuring plan for the almost insolvent carrier.


The bailout will be used to service and pay debt previously guaranteed by the state over the “medium term,” according to the country’s Finance Minister, Tito Mboweni.


This amount compares with 9.2 billion rand earmarked for South African Airways in October.


SAA has been a drain on the National Treasury for several years racking up losses of more than R32 billion over the past decade.
Late last year, the government placed the airline on a local form of bankruptcy protection, and administrators have set about reducing costs by closing routes and considering asset sale.
However, the Finance Minister has often stated his reluctance to support SAA while faced with bigger problems such as the $30 billion of debt owed by state-owned power utility Eskom Holdings.


In addition to Treasury funds, SAA was last month, given access to R3.5 billion from the state-owned Development Bank of Southern Africa.

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South Africa to Establish $2 Billion Sovereign Wealth Fund

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South Africa has announced that it will use money from the sale of broadband spectrum and mining royalties to establish a 30 billion-rand ($2 billion) sovereign wealth fund, according to the country’s Finance Minister,Tito Mboweni.


Its establishment was first mooted at least 10 years ago.
The proposed fund comes at a time when Africa’s most industrialised economy is struggling to contain rising debt amid sluggish economic growth and a budget deficit projected to widen to a near three-decade high of 6.8% in the coming fiscal year.


Mboweni says the legislative framework for the fund will be submitted to the parliament.


Funding will come from the government’s plans to sell broadband spectrum this year, along with royalties from petroleum, gas and mineral rights, as well as the sale of non-core assets, future surpluses and savings.


The government is also pressing ahead with plans to form a state bank that will operate as a retail financial institution premised on commercial principles, he said.


However, the Reserve Bank is yet to grant the proposed lender an operating license.

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