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Uptick in South African economy ahead of elections

South Africa’s economy grew by 1.4 percent in the fourth quarter of 2018, the statistics authority said Tuesday, easing pressure on the ruling ANC ahead of crucial elections.

President Cyril Ramaphosa, standing in his first direct election in May, vowed to revive the listless economy ahead of the polls by attracting $100 billion (88 billion euros) in foreign investment and by fighting corruption.

According to StatsSA, gross domestic product (GDP) was up 1.4 percent in the fourth quarter compared with the same period in 2017, bolstering overall economic growth to 0.8 percent in 2018 over 2017.

The finance, real estate and business services industries led the growth.

The positive performance of the fourth quarter is a sharp contrast from the first two quarters of 2018, when the country slipped into recession.

Agriculture, mining and construction industries, key economic sectors of the mineral-rich country, recorded negative growth in the third and fourth quarters of 2018.

“The mining and construction industries are in recession,” the statistics authorities said, adding that agriculture had been hit by a “slowdown in the production of field crops and horticultural products (which) stunted growth in the first two quarters.”

The economy of Africa’s most industrialised nation generated 4.87 trillion rand ($339 billion) in 2018, with the fourth-quarter growth contributing 1.26 trillion rand ($89 billion) of that amount.

Peregrine Treasury Solutions’ corporate manager Bianca Botes said that although the data reflected a “better-than-expected” GDP growth rate, the local currency’s performance would “remain subdued as the economy struggles to gain momentum”.

The South African Rand slightly strengthened to trade at 14.12 against the US dollar at 1155 GMT, up from 14.23 at the opening bell.

Ramaphosa was elevated to the presidency in February 2018 to replace the disgraced president Jacob Zuma, who stepped down over graft charges.

The country’s economic performance is seen as crucial to bolstering the ruling African National Congress’s standing ahead of the May 8 elections.

Voters have been buffeted by soaring fuel prices and a weak local currency while unemployment is stubbornly high at about 28 percent — rising to over 50 percent for young people.