The South African economy narrowly avoids falling into a recession
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The economy of South Africa has recently escaped recession within the second quarter of this year, although figures still show economic growth within the region to be relatively weak. Crippled, in particular, by the strike action that took place within the platinum sector for the initial half of 2014, real domestic product (GDP) has managed to grow by an increase of 0.6% on a seasonally adjusted, annualized, and quarter-on-quarter basis within the second quarter.
The economy of South Africa has recently escaped recession within the second quarter of this year, although figures still show economic growth within the region to be relatively weak. Crippled, in particular, by the strike action that took place within the platinum sector for the initial half of 2014, real domestic product (GDP) has managed to grow by an increase of 0.6% on a seasonally adjusted, annualized, and quarter-on-quarter basis within the second quarter.
This is following a contraction of 0.6% which took place within the first quarter of the year. The 0.6% increase took place against a BDlive median consensus forecast of approximately 0.85%, given by a survey of fourteen economists. The separate forecasts ranged between 0.1% and 1.8%.
How the Economy has begun to Grow
The economic growth within the second quarter was supported largely by business and finance services, including:
* Communication
* Storage services
* Transportation
* General government services
The estimate for the GDP within the first six months increased by 1.3% in comparison to the corresponding term in 2013. Unsurprisingly, the manufacturing and mining sectors remained somewhat disappointing in the way of production, and economists suggested that the effect of the five-month strike taking place within South Africa’s platinum mines may have begun to spill into other sectors. When asked for a forecast on the future of the country’s economy, they suggested that chances for quick improvement was unlikely.
A spokesperson from Capital Economics suggested that there is very little reason to expect a sudden turnaround when it comes to performance in the emerging quarters, and other analysts suggest that South Africa may becoming a victim to the growing credit bubble, after an African bank was bailed out by the country’s central bank, and four of the largest banks in South Africa were downgraded by the ratings agency, Moody’s.
The Outlook for South Africa
The country experienced its last recession in 2008, amidst the financial crisis which stormed the globe. By the emergence of 2011, South Africa had managed to establish a significant recovery, but there have been recent worries that it could slip back into trouble.
The most developed economy in Africa has been struggling largely due to rising food and fuel and food prices that have begun to squeeze consumers, as well as the successive waves of unrest within labor, in instances such as the mining strike. According to financial insiders, the economy within the country is, and will continue to be under a significant amount or pressure for the foreseeable future, and the problems will only continue if manufacturing and production do not pick up.
South Africa has serious race problems and corruption ones as well. But this is not well reported.
Economist, Elna Moolman, suggested that the weaker growth trajectory of the economy, alongside downside growth risks enhanced the concept accepted by most that the interest rate hiking cycle could continue to be particularly gradual.
