leeroy mupariri
South Africa’s economy unexpectedly contracted in the third quarter, after a sharp slump in farm output because of a drought.
Gross domestic product shrank 0,3 percent in the three months through September, Statistics South Africa said in a report released in the capital, Pretoria, on Tuesday.
That compared with revised growth of 0,3 percent in the prior period.
None of the nine economists in a Bloomberg survey expected the contraction.
The rand pared its gains to trade little changed against the dollar, and yields on government bonds remained lower after the data’s release.
Traders added bets on interest-rate cuts, with forward-rate agreements pricing in 73 basis points of reductions over the next 12 months, compared with 69 basis points before the GDP data.
“I would suspect that the market analysts maybe did not factor in such a decline in the agriculture industry because it did not have short-term indicators that point to this decline,” said Joe de Beer, deputy director-general of economic statistics at the agency.
“If we for a moment ignore the agriculture contraction,” the economy would have grown 0,4 percent, he said.
Last month, South Africa’s Department of Agriculture agreed to issue import permits for genetically engineered white and yellow corn from the US after a mid-summer drought caused a 23 percent drop in domestic production.
The contraction is a blow to President Cyril Ramaphosa and his coalition partners’s state objective of making growth a top priority. South Africa’s economic expansion has averaged less than 1 percent over the past decade, outpaced by population growth. – Bloomberg
Online Reporter
