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South African economy averts recession as mining sector rebounds

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5th March 2024

By: Bloomberg

  

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South Africa’s economy escaped a technical recession in the fourth quarter as fewer rotational power cuts helped energy-intensive industries including mining and manufacturing rebound.

Gross domestic product expanded 0.1% in the three months through December, compared with a contraction of 0.2% in the prior quarter, Statistics South Africa said in a report released in the capital, Pretoria, on Tuesday. That undershot the 0.2% median estimate of 12 economists in a Bloomberg survey.

Growth for the full year was 0.6%, compared with 1.9% in 2022.

Other sectors that contributed to growth in the fourth quarter included finance and transportation.

The figures are likely to be used by opposition parties to attack the ruling African National Congress (ANC) handling of the economy before a general election on May 29. Opinion polls show support for the ANC dipping below 50% for the first time since it came to power in 1994.

The economy’s lackluster performance last year was partly caused by logistical challenges at state-owned port and rail operator Transnet that hobbled exports and held up materials and goods needed for production. The number of ships waiting to berth at the Port of Durban, which handles the largest volume of sea-going traffic of any port in Southern Africa, stood at more than 60 vessels in mid-November before being reduced to just 12 by the end of January.

The logistical constraints and almost daily power cuts will likely continue to weigh on economic growth in the near term. The National Treasury expects the economy to grow 1.3% this year — insufficient to address rampant unemployment and poverty.

Household spending, which comprises about two-thirds of GDP, rose 0.2% in the quarter, after declining a revised 0.2% in the prior period.

Edited by Bloomberg

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