The last few weeks have seen mixed news on the South African economy. As usual there is a lot to worry about, but there are also reasons to be a bit more upbeat. Is the glass half full or half empty?
Faster growth
To start off with, the economy grew more than expected in the second quarter. Stats SA data on real gross domestic product (GDP), the broadest measure of economic activity, showed growth of 0.6% between the first and second quarters. The official numbers are no longer annualised, but if they were, it would amount to 2.4%. This was better than expected and shows an acceleration in growth from the first quarter despite the ongoing headwinds of loadshedding, logistical bottlenecks, high interest rates and lower commodity prices.
Particularly encouraging is the strong increase in fixed investment, albeit from a low base. Fixed investment spending grew 3.9% in the quarter (not annualised), accelerating steadily in the past few quarters. Most of this increase comes from the machinery and equipment category, probably largely related to investment in alternative sources of electricity.
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