It’s a sign of the profound weakness of the economy that every decimal point of data counts. So when the quarterly economic growth rate comes in at 0.6%, instead of the expected 0.1%, we shouldn’t forget that the outcome is still very weak. Any piece of goodish news is welcome in a bleak environment.
Latest GDP data indicate the economy has shown surprising pockets of resilience. Agriculture is one. Its swing from a steep negative in the first quarter to a decent positive was one reason for the economy’s better-than-expected performance.
Manufacturing proved surprisingly buoyant, as did mining, in a second quarter in which load-shedding was less worse than in the first. Robust quarterly growth of almost 4% in investment spending was another encouraging sign, with much of this likely coming from investments in rooftop solar and other corporate renewable energy projects.
Disturbingly, consumer spending, traditionally a mainstay accounting for about two-thirds of GDP, was in the red. Household consumption declined by 0.3% during the quarter. High food and fuel costs and high interest rates are taking their toll on households. A big concern is that spending on food declined during the quarter.
Despite the glimpse of light then, this is an economy still constrained by SA’s energy, logistics, crime and other self-inflicted woes, and as urgently in need of reform as ever.
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