The manufacturing sector helps lift SA out of a recession

Sick and tired of living in a recession? Well, Statistics SA has good news for you. The economy grew by 2.2% in the third quarter this year, meaning that the economy is growing and the country is no longer in a recession.

The 2.2% growth in the gross domestic product (GDP) in the third quarter — July to September — equates to an annualised 1.1% improvement from a year ago. The GDP measures the total output of the economy.

The rand strengthened after Stats SA released the results on Tuesday, with economist Lukman Otunuga of FXTM said: “a vulnerable dollar is poised to complement the rand’s gains”.

The main growth driver is the manufacturing industry which expanded by 7.5% in the third quarter from an increase in basic iron and steel, metal products, machinery and motor vehicles.

Stats SA lumps the following under manufacturing: iron and steel, metal products and machinery, wood, paper and publishing; petroleum, chemical products, rubber and plastic products; and motor vehicles, parts and accessories and other transport equipment.

Manufacturing was followed by agriculture where output increased by 6.5%. The transport, storage and communication sector was up by 5.7% while finance, real estate and business services increased by 2.3%, also in the third quarter.

The primary industry sector still lags, the mining industry decreasing by 8.8%, construction by 2.7% and electricity, gas and water by 0.9%.

The positive growth recorded in the third quarter follows two quarters of negative growth in the first (-2.6) and second (-0.7%) quarters this year.

Household final consumption expenditure increased by 1.6% in the third quarter which contributed 1.0% to total growth, Stats SA said.

However, independent consultancy Capital Economics says in a note that the growth trajectory will probably slow down in the final quarter of the year due to “weaker agricultural growth and the imposition of power cuts.”

Tshegofatso Mathe
Tshegofatso Mathe
Tshegofatso Mathe is a financial trainee journalist at the Mail & Guardian.
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