Farms and factories dragged South Africa out of its first recession in almost a decade, data showed on Tuesday, as the economy grew by more than expected in the third quarter.
The positive data is a boost for President Cyril Ramaphosa, who has pledged to re-start growth after a decade of stagnation under his predecessor, Jacob Zuma.
South Africa’s economy expanded 2.2% in the third quarter from the second, snapping out of recession after a revised 0.4% contraction in the previous quarter, data from Statistics South Africa showed.
The rand added to early gains, advancing to a session-best 13.56 per dollar at 0935 GMT from an open at 13.65.
The economic expansion will also ease fears of credit downgrades deeper into non-investment territory following warnings by agencies about the economy. All of the top three ratings firms have cited weak growth as a major threat.
Economists polled by Reuters had predicted a 1.6% expansion.
Manufacturing expanded 7.5%, agriculture grew 6.5%. Mining contracted 8.8%, however.
Last month, the central bank cut its 2018 growth forecast to 0.6%, a touch lower than Treasury’s 0.7% forecast in the October budget.
Analysts said they expected the recovery to continue into 2019, but that recent electricity outages by ailing power utility Eskom posed a threat.
Eskom implemented a sixth day of controlled power cuts on Tuesday, putting more strain on the economy and raising fears of the blackouts a decade ago that reduced GDP by about 1%.
“In all, the data confirms our view that the South African economy is recovering,” said chief Africa economist at Standard Charted Razia Khan. “Renewed load shedding is a source of downside risk.”
An analyst at NKC African Economics Elize Kruger said: “The result was in line with our forecast of 2% quarter-on- quarter, which is good news and also means the 0.7% growth forecast for full-year is still on track.”