Gold mining is credited with helping the South African economy to realize higher-than-expected growth in the second quarter of 2019 after a first-quarter contraction.
Gold has experienced a rally as many investors consider the metal to be a safe investment in turbulent economic times.
Economists predicting 2.4 percent growth were surprised to see their forecasts fall short as South Africa avoided a second recession in two years, with the economy growing by 3.1 percent in the three months ending in June, according to Fin24.
The figure is surprising due to a poor first quarter in which the South African economy shrank following load shedding, weak investment levels, a gold mining strike, and a weak grape harvest, BusinessInsider reported.
GDP declined by 3.2 percent in the first quarter of 2019, the largest quarterly drop in 10 years.
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Mining is credited with much of the positive momentum in the second quarter. It rebounded with growth of 14.4 percent – contributing a full 1 percent growth in GDP.
The boost in mining is a direct result of a major increase in metal prices and the end of strikes at gold mines.
South African finance and trade contributed 4.1 percent and 3.9 percent respectively to the country’s economic growth.
Avoiding a recession is good news for Africa’s most developed economy as annual economic growth has been poor in recent years.
South Africa’s GDP growth slowed from 1.3 percent in 2017 to an estimated 0.7 percent in 2018. South Africa’s GDP is expected to grow by 1 percent in 2019, the International Monetary Fund said in July.
While growth was above 5 percent from 2005-2007, and 3.2 percent in 2008, 2009 saw the South African economy contract by 1.5 percent due to the global economic crisis.
Growth from 2010 to 2013 hovered between 2.2 and 3.2 percent, with 1.5 percent growth in 2014. South Africa’s economy grew 1.3 percent in 2015 and only 0.6 percent the next year.
The recent growth is positive for the South African economy which has seen poor and inconsistent growth over the last 10 years. Compared to other emerging economies in Africa, South Africa’s GDP growth is below par.
In April the World Bank cut its 2019 growth forecast for sub-Saharan Africa to 2.8 percent from an initial 3.3 percent.
The top five fastest-growing economies in Africa all boast growth of more than 6.3 percent, including Ghana, Tanzania, Senegal and Ivory Coast. Ethiopia is the fastest-growing economy with around 8.5 percent growth expected this year.
