South Africa is out of recession, how will the economy benefit?

After suffering from a recession, South Africa has now turned its fortunes around as its economy grew 1.1% year on year in the three months to June. This is good news for South Africans, as it could spell a period of greater prosperity and economic growth.

Globally, this puts South Africa in a stronger position, and affords the government more options in terms of its ability to invest in the economy and move the country forward. Here are some of the effects moving out of recession may have.

South Africa’s recent growth is owed largely to the agricultural sector, which saw an increase in output of 33%. This suggests that this sector may offer more job opportunities, which could prove useful given that the country’s unemployment rate is exceptionally high.

The fact that the country is out of recession should also mean that jobs are created in a variety of other sectors, such as manufacturing and financial services. Much of this will depend on how the government responds to the newfound growth which South Africa is experiencing, and whether they manage to capitalise on it.

Further Economic Growth
Moving out of a recession is also likely to instigate further economic growth, as businesses will have greater capabilities and be able to improve the services/products they offer through greater investment capability.

An influx of workers could well see productivity go up, and many people may have a renewed interest in getting on the career ladder due to having more job security. Economic growth often leads to companies expanding their operations by branching out to different areas, so if the current growth continues then South Africans could well benefit from new and existing businesses popping up in their area.

Consumer Confidence
Another advantage presented by moving out of a recession is that consumer confidence and spending may go up. Those looking to invest in the South African rand may well look to opening a forex demo account in order to take advantage of the currency’s potential for appreciation in the coming months.

Increased spending could well provide an economic boost to sectors like tourism and retail, which may well harbour more job opportunities for people looking for work.

Will the Recovery Last?
It is important to note that, whilst moving out of recession is a positive step towards recovery, it is not necessarily indicative of a full recovery. If agricultural output slows down, then it may well drag the country’s economy back towards contraction, which would only serve to damage job creation and weaken the country’s economy.

That being said, the GDP growth is certainly a step in the right direction, and is a positive indicator that South Africa has the potential to recover in the not so distant future.

Ultimately, the economy could enjoy numerous benefits from coming out of a recession, largely in terms of job creation and increased confidence in most sectors. It remains to be seen whether the country is on a path for sustained recovery and growth, but the population will no doubt be happy that their prospects are improving, at least for now.

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