South Africa’s economy grew at a faster pace than expected in the first quarter of 2010 after last year’s downturn, although financial woes in Europe could undermine future expansion.
Statistics South Africa said quarter-on-quarter gross domestic product (GDP) was up 4,6% on a seasonally adjusted and annualised basis, partly boosted by preparations for the Soccer World Cup, compared with a 3,2% rise in the fourth quarter.
Africa’s biggest economy expanded by 1,6% year-on-year unadjusted, compared with a 1,4% contraction in the previous quarter.
Growth was led mainly by manufacturing and mining, which grew 8,4% and 15,4% respectively.
Both sectors saw record contractions in the first quarter of 2009, leading the economy into its first recession in nearly two decades on depressed local and global demand.
The first quarter 2010 outcome beat a consensus forecast of 4,3% GDP growth quarter-on-quarter from 19 economists polled by Reuters, who predicted a 1,4% rise on a year-on-year basis.
However, “we should guard against too much emphasis on a single number. The year-on-year figure is closer to what is happening in the economy than the quarter-on-quarter one,” said Joe de Beer, a senior official at the statistics agency.
De Beer said he did not want to speculate on when employment creation would catch up with economic growth, with last year’s recession having slashed nearly a million jobs.
Tuesday’s data showed growth was spread across agriculture, finance, and construction, as well as retail, which has to date lagged the general recovery.
“The recovery is more broad based, across the supply and demand sectors of the economy; retail is up after really lagging for some time,” said Brait Merchant Bank economist Colen Garrow.
“But one’s still got to be cautious because we’ve had the benefit of the upcoming Soccer World Cup and that impact will worsen by the end of the year and we will be affected by the crisis in Europe.”
South Africa hosts soccer’s premier tournament for a month from June 11, with economists predicting it could add about 0,5 percentage points to growth in 2010.
The rand, battered by renewed risk aversion due to eurozone debt worries, was trading at 8,0030 against the dollar at 1024am GMT compared with 7,9547 before the data was released at 9.30am GMT.
The yield on the 2015 bond was at 8,235% from 8,215%. – Reuters