SA economy's growth rate rises to 3.2%
South Africa’s economy expanded to a growth rate of 3.2% in the fourth quarter of 2011, Statistics SA said on Tuesday.
This was up from a revised 1.7% in the previous quarter, said Gerhardt Bouwer, executive manager of national accounts at Statistics SA in Pretoria.
The largest contributors to growth were the trade industries—wholesale, retail and motor, catering and accommodation.
This was followed by the manufacturing industry and general government services.
The first preliminary estimate of growth for 2011 was 3.1%, Bouwer said.
This was an improvement on 2010’s growth rate of 2.9%.
Although the 3.2% growth rate is a vast improvement from the 1.7% recorded for the third quarter in 2011, economists say this is not an indication of improved performance in the South African economy.
Chris Hart, chief economist at Investment Solutions, said while increased retail sales over Christmas and a recovery in the production sector led to a recovery in quarterly GDP figures, the lack of industrial action in the period must be factored in.
“The economy was essentially constrained in the second quarter due to stagnation in the production sector and a number of strikes. This improvement is off a low base and should be seen as such,” Hart told the Mail & Guardian.
Additionally, Standard Bank economist Shireen Darmalingam warned predictions see economic growth pulling back in 2012.
“The improved numbers shouldn’t fool you: we are not currently on an increasing growth trajectory but rather in a moderation cycle based on a slow-down in Europe,” Darmalingam told the M&G.
Finance Minister Pravin Gordhan cut his forecast for economic growth to 2.7% in 2012 during his budget speech in Cape Town last week—down from the 3.4% he predicted for the year in October 2011.
The downward trend in growth forecasts is down to fears of a double dip recession this year in Europe—one of South Africa’s largest trading partners.
The International Monetary Fund has projected the European economy will contract by 0.5% in 2012—strangling South Africa’s exports to the region.
This doesn’t bode well for the South African government, who are hoping to fight inequality, poverty and unemployment through polices based on an improved growth performance.
The enhanced infrastructure programme unveiled during President Jacob Zuma’s state of the nation address hopes to see the South African economy boom.
Although the plan depends largely on greater involvement from the country’s parastatals and will be funded by those institutions, higher growth is crucial to the project’s success.
Additionally, the government has predicted it will need a 7% growth rate if it is to sufficiently tackle unemployment and poverty.
Merina Willemse, economist at the Efficient Group, said South Africa’s current growth rate will severely hinder the implementation of government’s plans.
“Three percent or thereabouts is never enough to implement all of the plans government has. We need stronger growth over a more sustained period of time,” Willemse told the M&G.
Willemse also said the government should perhaps look at “doing more with less”.
“We should rather be planning for what we can do with 3% to 4% growth, instead of relying on growth figures we are yet to realise,” said Willemse.—Sapa