GDP confirms recession is over, but recovery still too slow

South Africa's real gross domestic product rose by 3.2% in the fourth quarter of 2009. This is the second positive quarter in a row and confirms that the recession is over. More importantly, it signifies that the recovery is gaining momentum, led by export sectors such as mining and manufacturing.

This result probably puts paid to any further rate cuts. It will also give confidence to Pravin Gordhan that his recently announced revenue targets are well within reach. In fact, there is every chance that revenue might exceed the budgeted estimates and that Government may need to rely less on borrowing from the capital markets than expected.

Nonetheless, the speed of the recovery is a bit disappointing. We should have seen a much bigger quarter given how far the economy fell in the early parts of last year. It is also worrying that the Government sector made an unusually big contribution on the quarter, which is probably not sustainable.