South Africa narrowly misses a technical recession

South Africa’s economy escaped a technical recession in the fourth quarter as fewer rotational power cuts helped energy-intensive industries including mining and manufacturing rebound.

GDP expanded 0.1% in the three months to end-December, compared with a contraction of 0.2% in the prior quarter, Statistics South Africa said in a report on Tuesday. Growth for the full year was 0.6%, compared with 1.9% in 2022.

Other sectors that contributed to growth in the fourth quarter included finance and transportation.

The figures are likely to be used by opposition parties to attack the ANC’s handling of the economy before a general election on 29 May. Opinion polls show support for the ANC dipping below 50% for the first time since it came to power in 1994.

The economy’s lacklustre performance last year was partly caused by logistical challenges at state-owned port and rail operator Transnet that hobbled exports and held up materials and goods needed for production. The number of ships waiting to berth at the port of Durban, which handles the largest volume of sea-going traffic of any port in Southern Africa, stood at more than 60 vessels in mid-November before being reduced to just 12 by the end of January.

The logistical constraints and almost daily power cuts will likely continue to weigh on economic growth in the near term. National treasury expects the economy to grow 1.3% this year — insufficient to address rampant unemployment and poverty.

Read: Energy, logistics crises are kneecapping South Africa’s economy

Household spending, which comprises about two-thirds of GDP, rose 0.2% in the quarter, after declining by a revised 0.2% in the prior period.  — (c) 2024 Bloomberg LP

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