South Africa beats IMF prediction, ‘averts’ recession

South Africa’s statistics office says the country has effectively averted a recession, beating the prediction of the International Monetary Fund (IMF) for the 2016 fiscal year.

In a report released on Tuesday, the statistics office said the south African economy grew by 0.6 percent year-on-year in the second quarter of 2016 after shrinking by 0.1 percent in Q1 2016.

“South Africa’s economy grew by 3.3% quarter-on-quarter (seasonally adjusted and annualised), according to estimates of real gross domestic product (measured by production),” the report read.

“This is the fastest quarter-on-quarter rise in economic activity since the fourth quarter of 2014. Year-on-year growth in the second quarter of 2016 was 0.6%.

“The mining and manufacturing industries contributed over half of the 3.3% rise. After contracting by 18.1% in the first quarter of 2016, the mining industry recovered strongly in the second quarter, rising by 11.8%. This was mainly due to increased production in platinum group metals (PGMs).”

In its revised World Economic Outlook (WEO), IMF had said South Africa’s economy is expected to grow at 0.1 percent in 2016.

The statistics office also said the production of automobiles aided the country’s manufacturing sector.

“A rise in the production of motor vehicles helped manufacturing expand by 8.1%, the highest expansion since the fourth quarter of 2013.

“This is corroborated by data from the expenditure side of the economy, showing a substantial rise in exports of passenger and goods-carrying vehicles.

“The agriculture industry continued its sickly run in recession territory, posting its sixth consecutive quarter of economic decline.

“The real value of the agriculture industry has fallen from R77,8 billion in the fourth quarter of 2014 to R66,7 billion in the second quarter of 2016.”

The country however experienced a contraction in the power sector for the period under review.

“Electricity, gas and water supply was the second industry to contract in the second quarter, falling by 1.8%. Electricity distribution in South Africa has been subdued, contributing to the industry’s contraction,” it said.

“The amount of electricity distributed was 2% lower in the first seven months of 2016 compared with the first seven months of 2015, according to Stats SA’s latest Electricity generated and available for distribution release.”