Picture: GALLO IMAGES/LISA HNATOWICZ
Picture: GALLO IMAGES/LISA HNATOWICZ

Don’t get too carried away by the economy’s surprising outperformance in the second quarter. Much of the rebound is due to statistical base effects and the stabilisation of electricity supply, rather than a sustainable economic recovery. Indeed, on an annual basis the economy grew by just 0.9% in the second quarter and recent data shows both local and global conditions have trended weaker since then.

Even so, SA should be allowed to bask in a rare bit of good news. Real GDP growth rebounded to 3.1% q/q, against a consensus expectation of 2.5%. This is a huge turnaround from the first quarter’s 3.2% contraction, when load-shedding and strikes took a heavy toll.

Very encouraging is the fact that the rebound was broad-based, with seven out of 10 sectors growing. Mining, finance and trade were the main growth drivers, led by a 14.4% q/q expansion in mining — its strongest showing in three years.

But perhaps the best news — because it is positively correlated with growth and job creation — is that fixed investment pulled out of a deep dive to grow by over 6% q/q.

Some economists will likely revise up their whole-year growth forecasts from the current consensus of 0.7%. Nominal GDP will benefit too, alleviating some of the pressure on the fiscus. Nothing like a little bit of good news to lift a nation’s flagging spirits.