South Africa has crawled out of the recession — but this does not mean an early Christmas for consumers who are being warned against overspending.

Stats SA said on Tuesday that the economy had returned to growth in the third quarter, with gross domestic product expanding 0.9 percent after three quarters of contraction (1.7 percent in the fourth quarter of last year, followed by 6.4 percent in the first quarter this year and a further three percent in the second quarter) which plunged the country into its first recession in 17 years.

South Africa joins developed countries, which have reported economic growth in recent months following what has been dubbed the worst economic downturn since the 1929 Great Depression.

The Treasury said the GDP figure was "the first positive sign that the country is emerging from the recession".

Lindani Mbunyuza of the Treasury urged consumers to continue spending responsibly: "Conditions over the medium term are likely to remain weak as the recovery is likely to be slow, so while the worst is almost over, it is not yet time to celebrate."

'Not yet time to celebrate'

Liberty Life consumer economist Tendani Mantshimuli said consumers were still jittery about spending: "I don't think we have turned the corner fully. People still don't have confidence to spend, and this could be attributed to the fact the people have lost their jobs and also for those who still have their jobs it is advisable not to spend if you are going to accumulate debt."

The slight GDP growth in the third quarter is a dim light on the horizon, said Stanlib economist Kevin Lings.

"We are not experiencing broad-based economic recovery just yet," he said, adding that South Africans need to start spending money to really get the country out of trouble.

But spending is not likely to increase because 24.5 percent of the population remains unemployed, and levels of bad debt are still on the increase.

The National Credit Regulator expects 150 000 consumers to be under debt review by Christmas. About 180 000 judgments and summonses for debt are issued every month, with 100 000 consumers owing R20-billion.

Recovery is still fragile

Neren Rau, chief executive of the SA Chamber of Commerce and Industry, said the news that the country was officially out of recession should be treated with caution.

"We all still need to watch our behaviour, because the recovery is still fragile. The improvement in the economy is very small and is being driven mostly by manufacturing. The advice for the consumers is to treat the news with conservatism.

"I would advise people to instead bank their 13th cheques and bonuses," Rau said.

However, he said he was positive about 2010 and predicted that the SA Reserve Bank will cut interest rates by 50 basis points at its next meeting in January.

He said retailers and wholesalers will be hardest hit during the festive season.

Beginning of the end of recession

Raymond Parsons, deputy chief executive of Business Unity SA, said: "This is just the beginning of the end of recession because we are still vulnerable as the unemployment might still continue for the few coming months. We need six to nine months of positive growth to know that we are safe."

Cosatu spokesperson Patrick Craven said: "We caution against people starting to celebrate, we should rather wait and see how the economy progresses to next year. For the workers and unemployment this economic recovery will take longer."

The latest GDP figures are expected to lift property prices, asset sales and services company Alliance Group said.

Alliance chief executive Rael Levitt said auction floors across the country have been indicating since the beginning of the third quarter that asset prices are rising and that frozen commercial and residential property markets are now thawing.

"(Yesterday's) news that South Africa has recorded positive growth for the third quarter of 2009, has been experienced first-hand by us and there has been a sharp downturn in distressed residential sales since June," Levitt said.

The Times with additional reporting by I-Net Bridge

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