South Africa’s economy gains 3.1% growth in Q2

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

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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.

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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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