South Africa’s real gross domestic product (GDP) at market prices on a quarter-on-quarter (q/q) seasonally annualised and adjusted basis rose by 3,9% in the second quarter of 2004 from a revised 3,6% increase in the first quarter of 2004, Statistics South Africa (Stats SA) said on Tuesday.
On a year-on-year (y/y) basis, second quarter 2004 GDP was up 2,5% from the first quarter’s revised 2,1% from the previous estimate of 1,9% y/y.
According to a survey of economists, second-quarter 2004 GDP growth was expected to have risen to a median forecast of 3,7% on a q/q seasonally annualised and adjusted basis.
The range of forecasts was from 2,5% to 5,2%. The growth rate on a y/y basis was expected to be in a range of 1,9% to 2,7% with a median of 2,3%.
Dawie Roodt, chief economist at the Efficient Group, said: “The number is a bit better than we expected. I think the market may react, but it is not that important because everything will be revised in October/November.”
Michael Keenan, market analyst at MMS International, commented: “The GDP figure was softer than expected. This GDP figure, as well as this morning’s money supply and private sector credit extension figures, will heighten hopes of an interest-rate cut.
“We think that the South African Reserve Bank [SARB] should hold off cutting rates, due to the strong domestic expenditure. However, the forward rate agreement, which is a good indicator of market expectations, points to a 25 basis-point cut at either the SARB’s October or December monetary policy committee meetings.”
Mike Schussler, economist at T-Sec, said: “Wonderful GDP figures. What is interesting is that the first quarter was revised upwards. The figures will probably be good for the rand, neutral for bonds and good for equities. The data really shows that the effect of lower interest rates is starting to come through. Hopefully, this is the long-awaited start of a higher growth path for South Africa.”
According to John Loos, economist at Absa Bank, the second-quarter GDP figure was lower than expected.
“However, combined with the upward revision in the first quarter GDP figure, this means that the outlook for growth remains largely the same. GDP growth for 2004 remains on track for 2,6%,” Loos said. “We continue to hold the view that interest rates will remain unchanged until the end of 2005.” — I-Net Bridge