Platinum group metals and fruit exports gave the struggling South African economy a leg up towards the end of last year.
The economy grew by 0.8% in the final quarter of 2018, cementing South Africa’s recovery from a painful recession earlier last year.
The latest numbers mean that South Africa grew by 0.8% over the whole of 2018 – compared to 1.4% in 2017, Statistics South Africa reported on Tuesday. Statistics SA also revised its growth figure for the third quarter: from 2.2% to 2.6%.
Financial services, transport and manufacturing all saw strong gains in the last quarter.
And while mining output continued to shrink in the past year, the value of mineral sales increased by an average of 10.6% in 2018.
“Platinum group metals (PGMs) in particular showed a significant increase in sales, rising by 26.9% in the year to December,” says PricewaterhouseCoopers economists Lullu Krugel and Christie Viljoen in a report.
An explosion in the palladium price in particular has been a great windfall for struggling local mines. South Africa is an important supplier of palladium, which is a by-product of platinum.
Palladium prices have tripled in the past three years as the metal gains popularity among carmakers, which use it to manufacture anti-pollution devices.
Another strong performance came from agricultural exports.
The value of agricultural exports increased last year to record highs (in US dollar terms) despite drought conditions in some areas, notes PwC. “Gains were seen in fruit categories like oranges, apples and pears, amongst others.”
The construction sector continued to shrink - contracting by 0.7% between the third and the fourth quarter.
Building activity declined for the seventh time in eight quarters as infrastructure spending continued to disappoint, says Krugel.
"South African businesses’ expenditure on fixed capital continues to suffer from weak business confidence and policy uncertainty."
The Bureau for Economic Research (BER) previously reported that seven out of every 10 respondents to its business sentiment survey remain unhappy with prevailing business conditions.
For South Africa to reach 1.5% growth this year, South Africa would need a notable improvement in business confidence in coming quarters, says PwC.
"This, in turn, will be dependent on the creation of policy certainty in several key areas, including the debate around land expropriation without compensation.
"The business community will also be interested in the make up of President Cyril Ramaphosa’s post-election Cabinet to gauge the outlook for governance over the next several years.”
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