South Africa, Nigeria exit recession

Economic recovery driven by farming

JOHANNESBURG: Two of Africa’s leading economies say they have emerged from recession.

South Africa and Nigeria yesterday released figures showing economic growth in the second quarter of this year.

Statistics South Africa said gross domestic product (GDP) increased by 2.5% in the second quarter of 2017, following a decrease of 0.6% in the first quarter of 2017.

Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 2.1% and a year-on-year expansion of 0.4%.

Africa’s most advanced economy, which entered a technical recession in March after two consecutive quarters of contraction, was lifted by 33.6% growth in agricultural output.

“The industry’s increase was mainly as a result of increases in the production of field crops and horticultural products,” said an official statement.

The opposition Democratic Alliance party said the slight improvement provided “little hope” for millions of the unemployed, as low growth was forecast for this year.

“The economy, which is set to grow at just 0.5% this year, is growing too slowly to increase the level of per capita income for the 30.4 million people living below the poverty line,” it said.

South Africa’s economy has experienced sluggish growth in recent years with the jobless rate rising to 27.7%.

Last month, official statistics revealed that more than half of the 56.5 million population were living in poverty, despite the government’s efforts to ease inequality.

In April, the country lost its investment grade credit rating when the world’s two major agencies, Fitch Ratings and Standard & Poor’s, downgraded its sovereign debt to junk status.

Their move was partly blamed on President Jacob Zuma’s sacking of respected finance minister Pravin Gordhan in March.

Zuma last month said that 2017 growth would be below 0.5%, down from a forecast of 1.3% in February, after the poor first quarter numbers.

The South African Reserve Bank cut its repo rate by 25 basis points to 6.75% in July for the first time in five years in order to support the economy.

The central bank has reduced its growth prediction for 2018 to 1.2%, down from 1.5%.

In Abuja, the National Bureau of Statistics (NBS) said that Nigeria has exited its worst economic recession in more than two decades, notching up growth of 0.55% in the second quarter of 2017.

Data showed that the economic recovery was driven by improved performance of oil, agriculture, manufacturing and trade sectors of the economy.

Since the first quarter of 2016, the Nigerian economy had contracted for five consecutive quarters, NBS said. The west African powerhouse slipped into recession for the first time in more than two decades in August 2016.

“In the second quarter of 2017, the GDP grew by 0.55% (year-on-year) in real terms, indicating the emergence of the economy from recession after five consecutive quarters of contraction since the first quarter of 2016,” it said.

Nigeria, which depends on oil sector for 70% of state revenues and 90% of export earnings, has been battered by lower oil prices since mid-2014, which have slashed government revenues, weakened the currency and caused dollar shortages, frustrating business and households.

The nation’s economic woes were excerbated by militant attacks on key oil infrastructure in the restive Niger delta, slashing output.

The crisis is heaping pressure on President Muhammadu Buhari, who took office in May 2015 on an anti-corruption platform.

His government is also grappling with separatist agitation in the country’s southeast, farmer-herders clashes in the central, Boko Haram insurgency in the northeast and kidnappings and militancy in the south.

Analysts said the outlook for more growth looks positive for Nigeria.

“You can see that there have been improved performances in non-oil sectors in the second quarter,” said Bismark Rewane of the Lagos-based Financial Derivatives Company.

“The prospects for more robust growth are bright. I hope the current economic diversification efforts which see efforts being given to agriculture and mining will be sustained,” he said.

“If there are no attacks on oil facilities and production is increased and Nigeria earns more money, then the economy will stabilise.”

Nigeria’s oil output has ramped up to an average of two million barrels per day from a low of 1.3 million in 2016 following government peace talks with the oil rebels.