South Africa’s economy grew faster than expected as agriculture and manufacturing industries helped lift activity.
Gross domestic product expanded 0.6% in the three months through June compared with growth of 0.4% in the prior quarter, Statistics South Africa said in a report released in the capital, Pretoria, on Tuesday. That’s more than the central bank’s forecast of 0.4% growth and the 0.3% median estimate of 15 economists in a Bloomberg survey. Economic output increased 1.6% from a year earlier.
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Read: Rand slips as power cuts bite, GDP in focus
Still, without the frequent power outages caused by Eskom’s inability to meet demand from its old and poorly maintained plants, and logistic constraints at state-owned port and rail operator Transnet, the economy would be growing at a faster pace.
Read: Eskom latest: Electricity outages ramped up to stage 6
Read: Transnet dagger pointed at the heart of SA’s economy
The Reserve Bank predicts electricity rationing will shave 2 percentage points off economic growth this year and a study by consultancy GAIN Group forecasts inefficiencies at Transnet will cost the economy R353 billion ($18.4 billion), equivalent to 4.9% of GDP.
Listen: Transnet kos ons ekonomie R1 miljard per dag
That means that economic growth for 2023 could have been much higher, the consultancy said in the report. The central bank expects the economy to expand 0.4% this year and the International Monetary Fund 0.3%.
Read: SA set for growth take-off if reforms happen, IMF says
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“The nearly 5% GDP loss is catastrophic and could have been even worse at higher commodity prices,” GAIN Group said.
The scaled-back growth is affecting National Treasury’s revenue projections and budget deficit forecasts.
Fixed-investment spending rose 3.9% from the previous quarter.
Household spending, which comprises about two-thirds of GDP, declined 0.3% in the second quarter. It’s likely to face further pressure because or rising gasoline prices and high interest rates that are at a level last seen 14 years ago during the global financial crisis.
Read: Too soon to celebrate the drop in inflation
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