National Treasury on Tuesday welcomed the news that the economy grew by 2.5% in the second quarter, technically signalling that South Africa was emerging from a recession, but said it was too soon to suggest a long-term upswing in the economy.
“Although it is still too early to suggest a longer term trend reversal, the data provides a platform that we can all build on for a more shareable growth path.”
The economy contracted by 0.6% in the first quarter of the year and by 0.3% in the last quarter of 2016.
Data released by Statistics South Africa on Tuesday, showed that growth was driven by the agriculture sector expanding some 33% as the country recovers from a protracted drought and greater activity in the mining and finance sectors.
Gross domestic product rose 1.1% on an unadjusted year-on-year basis in the three months to the end of June, after expanding 1% in the previous three months, the agency said.
Finance Minister Malusi Gigaba said any improvement in economic growth was encouraging, but cautioned that there was not cause for celebration yet.
“We need to remain honest about the major challenges that still face the local economy. Poverty, unemployment and inequality which are being underpinned by persistent low growth remain the challenge,” he said.
"Government and the private sector are to work closer together to inclusively develop the South African economy. I will be working closely with anyone who shares the urgency for higher economic growth.”
The rand strengthened on the back of the release of the economic data.
In July, the South African Reserve Bank cut the repo rate by 25 basis points to 6.75% in an effort to boost the economy.