South Africa’s second quarter economic growth surprises but outlook gloomy A customer compares prices while shopping at a Pick and Pay shop in East London, in the Eastern Cape province, South Africa, March 17, 2023. REUTERS/Siphiwe Sibeko
PRETORIA, Sept 5 (Reuters) – South Africa’s economy recorded a greater than expected expansion in the second quarter of 2023 helped by growth in the agriculture and mining sectors, data from the statistics agency showed on Tuesday.
Statistics South Africa said the economy grew by 0.6% in the April to June quarter of this year in quarter-on-quarter seasonally-adjusted terms after expanding by 0.4% in the first quarter, beating economists’ expectations of growth of 0.1%.
Economists had expected an escalation in rolling power cuts throughout the southern hemisphere winter to dampen growth during the quarter, but this did not materialize after power utility Eskom somewhat eased the levels of outages.
Six of 10 industries tracked by the statistics agency recorded growth in the second quarter.
“While the big electricity-dependent sectors of mining and manufacturing proved resilient to the load-shedding (power cuts), with power sector maintenance now being ramped up, there will at least be some hope of continued resilience,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered.
The economy expanded by 1.6% in year-on-year terms.
South Africa’s economic growth has in the last decade lagged the 5.4% annual growth envisioned in the country’s 2030 national development plan, with the energy crisis partially to blame.
This year, the South African Reserve Bank expects growth to reach just 0.4%, with marginal increases over the medium term.
Faced with an ailing economy and falling revenue, the National Treasury is planning sweeping cost-cutting measures ahead of the medium-term budget policy statement in October.
A downward revision to gross domestic product growth forecasts over the medium term is expected in October.
“We’ve got challenges,” Finance Minister Enoch Godongwana told Reuters last Thursday. “The economy is not performing well,” he added, citing power outages and logistical challenges as some of the issues that would impact government revenue this year.
(Reporting by Kopano Gumbi; Additonal reporting by Bhargav Acharya; Editing by Olivia Kumwenda-mtambo and Emelia Sithole-Matarise)
