SOUTH Africa’s stocks and currency inched up yesterday, cheering the stronger than ex‐ pected gross domestic product (GDP), which recorded the strongest expansion since the first quarter of 2015 in the past quarter.
Statistics SA said the economy advanced an annualised 3.1 percent quarter-on-quarter in the last three months of 2017, beating market expectations of 1.8 percent growth. Year-on-year, the economy grew 1.3 percent after a 0.6 percent expansion in 2016.
The agricultural sector was the star performer, recording the largest contribution to growth in the quarter. The agricultural, forestry and fishing sector increased by a significant 37.5 percent quarter-on-quarter, and added 0.8 of a percentage point to the quarterly GDP growth rate.
Capital Economics economist John Ashbourne said he expected the economy would main‐ tain the momentum in the coming quarters, and beat consensus expectations in 2018.
“We expect South Africa’s economy will continue to accelerate into 2018. We anticipate growth of 2 percent over the year as a whole, compared to consensus expectations of just 1.5 percent,” Ashbourne said.
Last year the economy was rocked by a technical recession after GDP eased 0.7 percent in the first quarter, following a 0.3 percent contraction in the last quarter of 2016.
The all-share index closed 2.3 percent higher at 59 242.86, while the Top 40 index inched up 2.42 percent to 52 257.99.
The key banks and industrial index also closed the day stronger, with Nedbank leading the lifting in sentiment, 4.29 percent stronger at R308.90.
Standard Bank rose 2.89 percent to close at R225.49, while Barclays Africa was up 2.63 per‐ cent to R207.16 and Capitec was muted, up just 0.46 percent to R869.43.
The rand raced to R11.71 from R11.85 against the greenback after Stats SA published the fourth-quarter GDP figures.
By 5pm, the local unit was bid at R11.76 against the dollar.
Allet Opperman, an analyst at TreasuryOne, said: “The rand’s fightback was also aided by news from the US that both Republicans and Democrats dismissed the idea that they would follow President Trump into trade wars. This lifted some uncertainty in the market, and we have seen emerging markets’ currencies firming up against the US dollar.”
In January, the International Monetary Fund (IMF) slashed South Africa’s growth forecast for the next two years, highlighting political uncertainty as hindering investments in the coun‐ try.
The IMF said it expected South Africa’s GDP to grow 0.9 percent this year, down from an earlier projection of 1.1 percent. The international body said the country’s economy would also grow 0.9 percent in 2019, a downgrade of 0.7 percent from prior estimates.
However, the National Treasury last month said it projected 1.5 percent growth this year on the back of an expected increase in private investment from an improved business and consumer confidence.
Rian le Roux, a strategist at Old Mutual Investment, said: “Looking into 2019, chances are that GDP growth will now equal or exceed 2 percent on account of a revival in confidence, the higher base of last year’s GDP, subdued inflation and the possibility of a moderate lowering of local interest rates by the Reserve Bank.”
President Cyril Ramaphosa’s elevation as head of the ANC and government has been cred‐ ited with allaying fears that the economy could find itself in the doldrums of policy and politi‐ cal uncertainty.
Sanisha Packirisamy, an economist at Momentum Investments, said she expected growth to average 1.8 percent for the next three years, increasing above 2 percent in the outer year.
“We expect a robust global economic recovery to support higher export growth, while con‐ sumption and investment may benefit from positive economic and political momentum,” Packirisamy said.