GDP figures show economy not as weak as thought

GDP figures released yesterday show that South Africa’s economy grew by a better-than-expected 3.1% in the fourth quarter of 2017 after expanding by an upwardly revised 2.3% in the third quarter.

The rand rose more than 10cents against the dollar following the release. By 5pm, the rand was bid at R11.76 – up 13c from the same time the previous day.

“The largest positive contributor to growth in GDP in the fourth quarter was the agriculture, forestry and fishing industry, which increased 37.5% and contributed 0.8 of a percentage point to GDP growth,” Statistics SA said yesterday.

Rian le Roux, a strategist at the Old Mutual Investment Group, said the key message of the fourth quarter numbers, and for the full calendar year, was that the economy was not as weak as previously thought. “Furthermore, it holds the promise of an even better growth year in 2018, especially with business and consumer confidence surging following the election of Cyril Ramaphosa as president of both the ANC and the country,” Le Roux said.

“Confidence was subsequently further boosted by the number of key cabinet changes and decisive action to sort out the problems at the state-owned enterprises.”

Le Roux said next year the chances were that GDP growth would equal or exceed 2% on account of a revival in confidence.

Citadel chief economist and advisory partner Maarten Ackerman said this GDP momentum would help support fiscal targets set in February’s Budget.

He added that total growth for last year rose to 1.3% rather than the 1% forecast by National Treasury during the Budget speech a few weeks ago despite the political turmoil and credit rating downgrades.

“Strong growth figures also substantiate Finance Minister (Nhlanhla) Nene’s announcement on Monday that GDP figures will be revised upwards in the October 2018 Medium-Term Budget Policy Statement, and confidence that South Africa will avert a credit rating downgrade by ratings agency Moody’s in March.”