PRETORIA, Sept 6 (NNN-SA NEWS) -- South Africa's Gross Domestic Product (GDP) grew by 2.5 per cent in the second quarter of 2017, following a contraction of 0.7 [er cent in the first quarter and a 0.3 per cent contraction in the fourth quarter of 2016, Statistician General Pali Lehohla said Tuesday.

We estimate real GDP growth to improve to 2.3 per cent quarter-on-quarter on an annualised basis from the first quarter's 0.7 per cent contraction. The growth from the low base in the first quarter will mainly be driven by improvements in mining, manufacturing, agriculture and trade, Nedbank economists said earlier this week in a research note.

Tuesday's data show that South Africa has moved out of a technical recession following two quarters of negative growth. The GDP figures showed that the largest positive contributor to growth in the second quarter was the agriculture, forestry and fishing sector, which showed an increase of 33.6 per cent and contributed 0.7 per cent GDP growth.

Joe De Beer, the Deputy Director-General of Statistics South Africa (StatsSA) responsible for Economic Statistics, said the 33.6 per cent growth was most likely driven by the record maize crop for this year. Meanwhile, electricity expanded 8.8 per cent, while the mining sector grew 3.9 per cent, contributing 0.3 per cent GDP growth.

Nominal GDP was estimated at 1,145 billion Rand (one US dollar = about 12.925 Rand) in the second quarter of 2017.

Household final consumption expenditure rose by 4.7 per cent quarter-on-quarter contributing 2.8 per cent to total economic growth. Expenditure on clothing and footwear were at 26.7 per cent, while food and non-alcohol beverages were at 10.1 per cent, contributing 1.9 per cent.

Finance Minister Malusi Gigaba cautiously welcomed the news that the economy has exited a technical recession, saying the country is still facing major challenges.

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 a challenge. 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, he said.

Welcoming the second quarter data, the Treasury said: Although it is still 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. Efforts to bolster confidence, as packaged in the 14-point Action Plan action items, together with continuing work through the economic cluster, should combine to set the country on a higher growth trajectory."