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South Africa’s first quarter GDP jumps 4.6%, above consensus
South Africa’s GDP increased at an annualised rate of 4.6 per cent in the first quarter of 2021. Finance, real estate and business services made the largest contribution to GDP growth, increasing at a rate of 7.4 per cent in the first quarter. This is above Reuters’ market consensus of 2.5 per cent. Statistician General, Risenga Maluleke and Cas Coovadia, CEO of BUSA join CNBC Africa for more.
Tue, 08 Jun 2021 11:09:07 GMT
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AI Generated Summary
- The first quarter of 2021 saw South Africa's GDP increase by 4.6 percent, surpassing market expectations.
- The finance, real estate, and business services sectors were the primary drivers of growth, while agriculture and utilities underperformed.
- Provinces with diversified economies showed stronger growth, highlighting disparities in economic performance across regions.
South Africa’s GDP has seen a surprising increase at an annualized rate of 4.6 percent in the first quarter of 2021, surpassing Reuters’ market consensus of 2.5 percent. This growth was mainly driven by the finance, real estate, and business services sectors, which expanded by 7.4 percent and contributed significantly to the overall economic performance. However, other sectors such as utilities and agriculture didn't fare as well, signaling a mixed bag of results across the economy.
Risenga Maluleke, the Statistician General, highlighted the strong performance of finance and mining as key contributors to the growth, while pointing out the weaknesses in the agriculture and utilities sectors. He also emphasized the significant challenges faced by the economy in recent years, with a slow decline since 2017 and a more pronounced downturn in 2020.
Cas Coovadia, CEO of Business Unity South Africa (BUSA), echoed concerns about the economy's overall contraction over the past five years, emphasizing the need for urgent structural reforms to boost growth. Coovadia noted the positive developments in sectors like mining and finance but expressed disappointment in the lackluster performance of agriculture, utilities, and industrial activities.
The conversation between Maluleke and Coovadia shed light on the disparities in economic performance across South Africa's provinces. Provinces with diversified economies, such as Gauteng, showed stronger growth compared to regions more reliant on agriculture, like the Free State and the Eastern Cape. Despite some provinces experiencing growth, the overall economy is still below its size in 2016, indicating a prolonged period of economic stagnation.
Looking ahead, both Maluleke and Coovadia stressed the importance of collaborative efforts between the government and private sector to implement reforms swiftly and address the structural issues hindering long-term growth. Key areas of focus include expediting mining licenses, improving energy infrastructure, and enhancing regulatory processes to attract investor confidence.
While the first quarter GDP figures show some positive signs for South Africa's economy, there is a consensus among experts that sustained growth requires bold actions and decisive policies to address the underlying challenges. As the country navigates its way out of the COVID-19 crisis, the spotlight remains on driving recovery and revitalizing key sectors to ensure a more resilient and prosperous economic future.
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