19 August 2009
South Africa’s gross domestic product (GDP) growth contracted by three percent in the second quarter of 2009, indicating that the economy is still in recession, but with signs that a recovery is in sight.
“The seasonally adjusted real GDP at market prices for the second quarter of 2009 decreased by an annualised rate of three percent compared to the first quarter’s 6.4%,” Statistics South Africa (Stats SA) reported on Tuesday.
Fourth-quarter growth expected
Nedbank economist Nicky Weimer told BuaNews that the figure had been expected by the market. “Overall it is still a weak number,” Weimer said. “However, the good news is that the contraction is at a slower pace.”
Business Day said on Wednesday that when the year’s first-half figures were compared with those of last year, economic growth was down by only two percent.
“It is expected to stabilise next quarter, and move back into growth by the fourth quarter, making it unlikely that the full-year decline will be as bad as the two percent plus that more pessimistic economists had predicted,” the business daily said.
Consumers ‘reluctant to spend’
The main contributors to the second-quarter decrease in economic activity were the manufacturing industry (-1.6 percentage points), and the wholesale and retail trade and hotels and restaurants industry (-0.6 of a percentage point).
The finance, real estate and business services, and the agriculture, forestry and fishing industries also contributed to the drop in GDP growth.
This was despite the South African Reserve Bank having cut interest rates by a cumulative five percent since December last year.
While South Africans had more disposable income following the rate cuts, they were either still reluctant to spend or were servicing their debts, Stats SA’s Kedibone Mokone told Business Report.
Analysts interviewed by Business Report said the GDP data suggested that South Africa’s economy was still struggling, despite the easing in monetary policy.
“The data backs up suggestions from Central Bank governor Tito Mboweni and Finance Minister Pravin Gordhan that any recovery in South Africa’s economy will lag others, after several developed countries recorded second-quarter growth,” the paper said.
Construction, mining growth
Industries that contributed to positive second-quarter growth included construction (+0.5% of a percentage point), general government services and mining and quarrying (each contributing +0.3% of a percentage point), as well as personal services (0.1% of a percentage point), Stats SA reported.
Mining and quarrying were among the main contributors to the first-quarter GDP contraction.
Stats SA said the increase in mining and quarrying in the second quarter was due to an increase in the mining of other metal ores, including platinum, and other mining and quarrying, including diamonds.
SAinfo reporter and BuaNews
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