Robust growth in SA agriculture pulls economy out of recession

South Africa has moved out of recession and returned to growth. It was driven by a growth in agriculture production after recovering from the worst drought in years.

The Financial Times reports that agriculture added 0.7 percentage points to the overall growth of 2.5% the economy experienced in the second quarter. It comes after predictions of the biggest maize harvest ever for 2017.

Agbiz said the sector expanded by 33.6% in the second quarter, compared to the first quarter of the year, when the industry also increased with 22%. The trend is expected to continue.

“Overall, we expect this growth path to be sustained throughout the year, but at a relatively lesser degree than what we observed in the first two quarters of the year.

“These results mirror increased activity in the overall agricultural sector, particularly summer grains, oilseeds, vegetables, as well as a slight recovery in the livestock industry.”

One area of concern is the continued dry conditions in the Western Cape. The largest contributor to South Africa’s agriculture sector makes up 22% of the country’s agricultural economy. The province experienced a third year of below average rain, with average dam levels at 35.1% at the end of the rainy season.

According to Wandile Sihlobo, economist from Agbiz, the ongoing dry conditions could affect the performance of summer horticultural products, winter grains and oil seeds, making up the majority of the 22%.

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