South Africa’s real gross domestic product (GDP) at market prices on a quarter-on-quarter (q/q) seasonally annualised and adjusted (saa) basis rose by 3,5% in the first quarter of 2005, from 4% in the fourth quarter of 2004, Statistics South Africa said on Tuesday.
On a year-on-year basis, first-quarter 2005 GDP was up 4,2% from the fourth quarter’s 4,7%. The fourth-quarter growth rate was the highest year-on-year growth rate since the third quarter of 2000, when growth was 5,2%.
According to a survey of economists, first-quarter 2005 GDP growth was expected to have slowed to a median forecast of 3,5% on a q/q saa basis. The range of forecasts was from 2% to 4,6%. The growth rate on a year-on-year basis was expected to be in a range of 4% to 4,7%, with a median of 4,4%.
Commented Johan Botha, senior economist at Standard Bank: “The figure is obviously less than what we expected. I think the main driver was probably the manufacturing, which is not doing so well at the moment. There are clear signs that the economy is slowing down and we have been seeing other indicators suggesting this.
“It could be that the services industry has been the source of growth this time around as it has done over the past few years. As a result of these figures, we should expect a slight lowering in growth forecasts.”
Said Colen Garrow, economist at Brait: “Clearly the impact of the rand on the production side of the economy has led to the slowness in GDP at 3,5%.
“For the year, we are still on line to reach 4%, but as far as rate cuts are concerned, my feeling is that the South African Reserve Bank will leave rates untouched with subdued growth figures like this.”
Annabel Bishop, economist in the Investec Group’s economics division, said: “GDP growth for Q1.05 came out slightly weaker than widely expected, but still above trend and, as such, does not argue for an interest-rate cut.
“We continue to forecast that interest rates will remain on hold this year, with the previous risk to our forecast of a Q3.05 interest-rate cut now diminishing with the rand’s weakness.
“We still forecast GDP growth of 4% year-on-year for 2005 and an average of close to 3,7% over the medium term.”
Michael Keenan, market analyst at Econometrix Treasury Management, said: “The figure is softer than what we had expected and we’re not surprised to see the subsequent short covering in the bond market, given that the soft growth figures keep alive the chances of another interest rate cut.
“Not having examined the numbers yet, I suspect the weakness was brought about by the uncompetitive nature of the rand and slowing global economy.”
Said Dawie Roodt, chief economist at the Efficient Group: “The number is significantly lower than what we expected. But one must remember that it is just one quarter and there is a lot of statistical noise in this number. It is quite possible that GDP growth will exceed 4% for the year.” — I-Net Bridge