South Africa’s ailing economy grew by 2 percent in the third quarter, lifted by the agricultural sector which is recovering from a severe drought, official figures released on Tuesday showed. “The South African economy grew by 2.0 percent in the third quarter of 2017 down from a revised 2.8 percent in the second quarter,” Statistics South Africa said in a statement.
The agency said agriculture, mining and manufacturing were the “main drivers of the expansion” with increased corn and vegetable production. Improved gold and platinum production saw the key mining industry grow by 6.6 percent. Africa’s most industrialized economy in the second quarter came out of its first recession in eight years, but economists have warned that the worst was not yet over.
The country this year lost its investment grade credit rating when the world’s two major agencies, Fitch and Standard & Poor’s, downgraded its sovereign debt to junk status. Local bank Nedbank has stated that economic growth might weaken in the final quarter, citing risks of further downgrades, including the impact of the current political tensions linked to the elective congress of the ruling African National Congress (ANC) this month.
“Even if the new leader of the ANC is welcomed by the markets, decisive and immediate action will be required to tackle corruption and lift economic growth to avoid the dreaded universal junk status and its damaging impact on capital flows, asset prices, interest rates and the rand,” said Nedbank in a statement.
“We are assuming some improvement in country’s political leadership, but anticipate political tensions to linger and some degree of policy and legislative uncertainty to persist.” South Africa’s economy has experienced sluggish growth, much lower than other developing economies in the region, as low investment pushed the jobless rate to a record 27.7 percent. The central bank has reduced its growth prediction for 2018 to 1.2 percent, down from 1.5 percent.