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South Africa has moved out of a technical recession, with Gross Domestic Product (GDP) growing 2.5% in the second quarter, well ahead of expectations for a 2.0% rise. That was a strong turnaround after the South African economy contracted by 0.7% and 0.3% quarter-on-quarter in the previous two quarters, respectively.
The primary sector led the economic growth in the second quarter, growing 10.3%. That was led by the agriculture and forestry sector, which surged 33.6% thanks to a recovery from drought conditions and a record maize yield. The improved weather conditions are expected to benefit the agriculture sector further in the third quarter as maize crops are expect to produce near-record yields once again. Elsewhere, the mining and quarry industry grew 3.9%, while the manufacturing sector grew 1.5%.
Technical analysis for the rand
The rand reacted favourably to the economic data, strengthening most noticeably against the US dollar, which comes under pressure across the board after further dovish comments from Federal Reserve officials, as well as weaker-than-expected US economic data.