Reg Rumney
Blame it on the weather and industrial relations on the
Preliminary figures show economic growth, as measured by the gross domestic product (GDP) — the total value of all goods and services, adjusted for seasonal factors — slowed to an annualised and real or adjusted-for-inflation 0,8 percent in the second quarter of this year. This follows unspectacular growth of 1,4 percent in the first quarter.
The Central Statistical Service ascribes the drop mainly to the plunge in agricultural production, which fell almost 42 percent, annualised, after falling 18 percent in the first quarter.
If agriculture is excluded, the economy grew 3,1 percent in the second quarter, a full percentage point higher than the first-quarter figure.
Encouragingly, one of the sectors which contributed to that higher growth was manufacturing, with a growth rate of seven percent. With the exception of mining, other sectors also showed growth. Mining’s contribution to non-farm GDP dropped 11 percent, after a decrease of 10,1 percent in the first quarter.
Standard Bank economists, in the latest Economic Review, lay the blame for mining’s poor showing on “liberation expectations” among the workforce, with gold production worst affected.
They say the fall in gold production can be traced back to a slowdown in the output of underground operations, which account for 93 percent of all gold produced by South Africa.
While the many public holidays in the first half are a part of the cause, organised labour can be expected to deny vigorously that the problems of the mines are the workers’ fault. Whatever the reason, Standard reckons reduced gold production in 1995 is expected to trim potential economic growth by half a percent.
In the same vein, Standard has predicted that lower agricultural output could knock at least 0,5 percent off economic growth this year.
While the underlying strong momentum of the economy is welcome news, it means that further interest-rate hikes cannot be ruled out.