South Africa’s real gross domestic product (GDP) at market prices on a quarter-on-quarter seasonally annualised and adjusted basis rose by 4,2% in the third quarter of 2005 from a revised 5,4% (original estimate was a 4,8% gain) in the second quarter, Statistics South Africa said on Tuesday.
The range of forecasts was from 3,8% quarter-on-quarter to 4,8%.
Mike Schussler, economist at T-Sec, said: “The figure is little under expectations, but the number is still good. The revisions are the most important thing here and should help equities. The figure will probably be good for the rand. The revisions in the first and second quarter are very good.”
Commented Colen Garrow, economist at Brait: “It’s incredibly strong. This shows that the economy has been performing a lot stronger than what we thought it has, and it makes a compelling case to not do anything with interest rates.
“The revisions, in particular, stress that much. So, on balance, they’re good numbers, but on interest rates it should be steady to high in the new year.”
John Loos, economist at Absa, said: “I had expected it to get a bit slower. I think the economy is just feeling some effects of high oil prices, which do affect the consumer and, I might add, also affect the whole world’s economy.
“Apart from that, there was no interest-rate stimulus in the third quarter, so the consumer boom is slowing down after it peaked in the second quarter.
“These factors lead me be unsurprised at the slowdown and I think it will show further signs of slowing towards 2006. I guess the positive side is that any home-grown underlying inflationary pressures will dissipate and that the slowing economy, along with a gradually recovering rand and oil prices, could pave the way for a minor rate reduction next year.”
The GDP growth came out slightly weaker than widely expected, but still above
trend, said Annabel Bishop, economist at Investec. As such, it does not argue for an interest-rate cut.
“We continue to forecast that interest rates will remain on hold this year and next. Whilst the revision to the numbers requires a reworking of the actual figures in our growth forecasts, we still expect a GDP growth rate of at least 4% year-on-year for 2005,” Bishop said. — I-Net Bridge