South Africa’s economic system unexpectedly contracted within the third quarter, after the agriculture sector slumped essentially the most in a minimum of three a long time.

Gross home product shrank 0.3% within the three months via September, Statistics South Africa mentioned in a report launched within the capital, Pretoria, on Tuesday. That in contrast with revised development of 0.3% within the prior interval. None of the 9 economists in a Bloomberg survey anticipated the contraction.

Read: Goldman’s upbeat South African inflation call outdoes Sarb view

For the 9 months via September, an early indicator of the place full-year development might land, GDP expanded 0.4% from final yr.

The rand pared its beneficial properties to commerce little modified in opposition to the greenback, and yields on authorities bonds remained decrease after the information’s launch. Traders added bets on interest-rate cuts, with forward-rate agreements pricing in 73 foundation factors of reductions over the following 12 months, in contrast with 69 foundation factors earlier than the GDP information.

Agriculture recorded its second consecutive decline, falling by 28.8% within the third quarter. It was the most important detrimental contributor, pulling GDP development down by 0.7 of a proportion level, the statistics company mentioned.

Read: Johannesburg to tap mountain reservoir as water supplies fall

“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,” mentioned Joe de Beer, deputy director-general of financial statistics on the company. “If we for a moment ignore the agriculture contraction,” the economic system would have grown 0.4%, he mentioned.

Read: ‘Farmers need more support’

An El Niño-induced drought closely weighed on South Africa’s 2023-24 summer season crop manufacturing, with lingering animal illnesses exacerbating the affect on the sector, Wandile Sihlobo, chief economist on the Agricultural Business Chamber of South Africa, mentioned in a notice.

Last month, the Department of Agriculture agreed to problem import permits for genetically engineered white and yellow corn from the US after the drought brought about a 23% drop in home manufacturing.

Read: SA plans US corn-import permits as drought cuts crop

The contraction is a blow to President Cyril Ramaphosa and his coalition companions’ goal of constructing development and job creation a high precedence. South Africa’s financial growth has averaged lower than 1% over the previous decade, outpaced by inhabitants development.

© 2024 Bloomberg

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