PIETER BRUWER, Johannesburg | Monday 9.40am
SUNFLOWER seeds and chickens were two of the main reasons the economy expanded at a faster-than-expected rate in the second quarter, according to the latest Gross Domestic Product figures released by Statistics South Africa on Monday.
Stats SA said that the economy grew by 1,7% in the second quarter of 1999. The figure compared with a growth rate of a revised 0,6% in the first quarter. It was also above a Reuters consensus of economists, who predicted a growth rate of 0,8%.
The overall growth rate was boosted by a surge in agricultural production, which grew by 19,7% after 1,3% in the first quarter.
”The large increase… was mainly due to good performance by some field crops, in particular sunflower seed, and the rapid expansion of the production of poultry,” the report said. Production of the lucrative sunflower seed crop has nearly doubled this year amid increased demand from the European Union.
Despite the improvement in the overall growth rate, GDP falls well short of growth rates needed to haul millions of unemployed people back to the workplace with the unemployment rate standing at 30%.
”GDP is improving but it is still indicating we need to cut interest rates further to get the magic numbers of between three and five percent,” said ABN AMRO economist Colen Garrow.
Interest rates have fallen by nearly seven percentage points since peaking at 25,5% during last year’s emerging markets crisis.
Economists said the cheaper cost of money was one of the main reasons for improvements in growth rates in the country’s service industries such as banking and real estate. Lower interest rates have also begun stoking consumer demand, which was evident in improved retail and wholesale industry growth, economists said. –Reuters