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S.Africa economy grows 1.3% in 2017, beats expectations

South Africa’s economy grew by a better-than-expected 1.3 percent in 2017, driven by agriculture and finance, Stats SA said on Tuesday, beating forecast growth of 1 percent.

The improved economic performance “was partly driven by an agriculture industry bouncing back from one of the worst droughts in recent history”, it said.

“After a wobbly start to 2017, which saw economic activity contract in the first quarter, the economy saw sustained growth for the remainder of the year. The fourth quarter experienced the highest growth rate of 2017, with the economy expanding by 3.1 percent quarter-on-quarter,” Stats SA said in a statement.

The trade sector also contributed to Tuesday’s good news, Stats SA added, and was the second largest contributor to fourth-quarter growth.

Jameel Ahmad, head of market research at FXTM, said Tuesday’s figures were a boost for confidence.

“While the South African economy still has some distance to go when it comes to realising its potential, if economic announcements can maintain this type of momentum it will increase… sentiment towards the South African economy,” he said in a statement.

South Africa’s economy has experienced sluggish growth in recent years with the jobless rate rising to 27.7 percent.

In April, the country lost its investment grade credit rating when the world’s two major agencies, Fitch and Standard & Poor’s, downgraded its sovereign debt to junk status.

Their move was partly blamed on former president Jacob Zuma’s sacking of respected finance minister Pravin Gordhan in March.

“The stronger than expected GDP reading could also reduce fears of another credit downgrade,” added Ahmad.

Since President Cyril Ramaphosa succeeded Zuma last month, the stock market has rebounded and the local rand currency has reached its strongest level against the dollar in three years on hopes he will reform the economy.

“We have been hearing a lot recently about a new dawn. We have a new President who has made all sorts of promises about doing things differently,” said main opposition Democratic Alliance leader Mmusi Maimane. “That’s good. But the time for promises has come and gone.”