South Africa’s GDP up, mining rebounds

28 August 2012

South Africa’s economic growth quickened in the second quarter as the country’s mining sector rebounded following months of contraction.

South Africa’s real gross domestic product (GDP) at market prices increased by 3.2% in the second quarter, up from 2.7% in the first quarter, Statistics South Africa (Stats SA) reported on Tuesday.

This was marginally below the consensus among analysts that GDP would rise to 3.3%.

Contributions: mining to the fore

Mining registered a 31.2 percent jump in output, coming off a low base of -16.8 percent in the first quarter.

Stats SA said mining and quarrying accounted for 1.5 percentage points of the 3.2% increase, while finance, real estate and business services contributed 0.5 percentage points.

The wholesale‚ retail and motor trade‚ catering and accommodation industry contributed 0.4 of a percentage point, general government services contributed 0.3 of a percentage point, while the transport, storage and the communication industry contributed 0.2.

Negative contributions included manufacturing‚ which subtracted 0.2 of a percentage point, and the electricity‚ gas and water industry, which subtracted 0.1 of a percentage point.

Manufacturing contracts

Manufacturing output showed negative growth of 1% for the quarter. GDP manager at Stats SA Kedibone Mabaso said this could be attributed to lower production in basic iron and steel as well as in wood and wood products.

Mabaso said growth in the mining and quarrying industry reflected higher production of other metal ores including platinum, other mining and quarrying and coal.

The unadjusted real GDP at market prices increased by 3% year-on-year, while the unadjusted real GDP at market prices for the first six months of 2012 increased by 2.5% compared to the first six months of 2012.

The nominal value added during the second quarter of 2012 was R788-billion. This is R23-billion more than in the first quarter of 2012.

Economy ‘to grow at 2.5% for 2012’

Economists at Nedbank said South Africa’s economy was still expected to grow by 2.5% for 2012, adding that mining would come under renewed pressured because of a weak global economy.

In the same breath, they predicted that manufacturing would be hurt by weak external demand, while consumer orientated sectors would continue to see growth but at a slower pace, as growth in disposable income moderated due to higher inflation and a stagnant jobs market.

“The latest GDP figures were in line with expectations and are unlikely to have implications for monetary policy in the short term,” said Nedbank, adding that the Reserve Bank’s monetary policy committee (MPC) was likely to maintain its accommodative monetary policy stance in the months ahead.

“With the inflation outlook likely to start deteriorating once the effects of the weaker rand and higher food and oil prices start to filter through, we think that the MPC will keep interest rates on hold rather than ease further. No change is expected until at least the fourth quarter of 2013,” Nedbank said.

The committee will hold its next meeting from 18 to 20 September., with additional reporting by SAinfo