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South African economy bigger than pre-COVID after Q3 surprise

Statistics South Africa figures showed eight of 10 industries recorded positive growth in the July-September period.
Statistics South Africa figures showed eight of 10 industries recorded positive growth in the July-September period.
Image: 123RF/ANDRIY POPOV

South Africa's economy grew by a surprisingly large 1.6% in the third quarter of 2022, from a contraction of 0.7% in the second quarter, making it larger than it was before the COVID-19 pandemic, official data showed on Tuesday.

Statistics South Africa figures showed eight of 10 industries recorded positive growth in the July-September period. The agricultural sector was the largest contributor to growth which Stats SA attributed to good weather and bumper crops.

Analysts had predicted 0.6% growth quarter on quarter. Although growth was stronger than that, some economists doubt it will continue to be so robust.

"Today's print gives reason for cheer but we need to be aware of tough growth conditions ahead globally as well as locally," said Sanisha Packirisamy, economist at financial services group Momentum.

"We are concerned about the continued strength of exports into 2023, given that many of South Africa's export partners including the US, UK and Germany have seen growth forecasts for 2023 being pared back," Packirisamy added.

Gross domestic product grew 4.1% year on year in the third quarter, also better than the second quarter's 0.2% year-on-year growth and forecasts for a 2.8% expansion.

"The outturn was stronger than even the most optimistic forecast," Jason Tuvey, an economist at Capital Economics, said in a note. "We had predicted stagnation in Q3."

Tuvey told Reuters he would be upgrading his forecast for growth for the whole of 2022 from 1.5% to somewhere between 2.5% and 3%.

As of last month, the South African Reserve Bank was predicting 1.8% growth this year.

Constraints on growth this year have included severe flooding that hampered operations at a key export hub and record power cuts. 


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