Farms put GDP back in black as SA emerges from recession

South Africa emerged from a recession in the second quarter as agriculture helped the economy expand more than expected, Statistics SA said yesterday.

Africa's most industrialised economy expanded 2.5% in the three months to the end of June after contracting by 0.6% in the first quarter and by 0.3% in the final quarter of last year.

The rand firmed against the dollar in response to the data, and was trading 0.23% firmer at R12.9500/dollar yesterday.

Government bonds firmed, with the benchmark paper down 1.5 basis points to 8.5%.

President Jacob Zuma last month said that 2017 growth would be below 0.5%, down from a forecast of 1.3% in February, after the poor first-quarter numbers.

Helping the recovery was growth in agriculture, with the sector expanding 33.6% as it recovers from last year's drought.

The other key sectors of mining, manufacturing and trade also registered growth.

GDP rose 1.1% on an unadjusted year-on-year basis in the second quarter, compared with 1% expansion in the previous three months, the agency said.

Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 2.1% and a year-on-year expansion of 0.4%.

"The growth rate is not what planners would have wanted. Although it's not negative, it is not at the level that was planned for," said statistician-general Pali Lehohla.

Since emerging from the 2009 recession, South African growth has fallen short of the government's 5% target that economists say is needed to curb unemployment.

"The Q2 GDP data demonstrates some momentum in the economy, but this is unlikely to be sufficient to discourage the Reserve Bank from further easing in support of the economic recovery," said Standard Chartered Bank's chief Africa economist, Razia Khan.