“The short-term indicators seem to tell us that the economy is picking up but long-term indicators tell us the economy is still [weak],” Joe De Beer, Statistics South Africa’s head of economic analysis and research, said.
The central bank loosened monetary policy in December last year, cutting interest rates by five percentage points, in an attempt to provide economic stimulus.
Annabel Bishop, an economist at Investec, said: “South Africa’s better-than-expected GDP outcome closes the door on any further interest rate cuts, and potentially brings the timing of the first rate hike closer.”
But Bishop said that South Africa’s dependence on global demand, high job losses and native firms’ failures would prevent a sharp recovery.
In the first quarter of this year, GDP fell by 6.4 per cent, followed by a 3 per cent drop in the second quarter.