The South African Economy Ends its Technical Recession
South Africa’s seasonally adjusted and annualized quarterly GDP grew by 2.5% during the second quarter of 2017. This is a welcome outcome, largely expected by the market (as high frequency data was pointing to a positive growth outcome). This means South Africa is out of the technical recession which it had entered following two consecutive quarters of negative GDP growth (fourth quarter 2016: -0.3% q/q, first quarter 2017: -0.6%q/q (upwardly adjusted from -0.7% q/q)).
The magnitude of the growth rate (2.5%) is mostly from base effects, as the preceding quarters had registered contractions. A similar trend can be seen during the last time South Africa’s quarterly GDP growth came in over 2%, i.e. during the second quarter of 2016, when it registered 3.1% q/q following a contraction of 1.5% q/q in the first quarter of 2016. This shows the extent of the pressure on the South African economy causing relatively large swings ‒ with periods of somewhat decent growth taking place mostly after periods of very low growth or contractions.
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