South Africa’s manufacturing output growth slowed to 3,8% year-on-year in April, suggesting the key sector could put a brake on economic growth this year.
Statistics South Africa said growth in volume terms eased from an upwardly revised 5,5% in March, with month-on-month production contracting a seasonally adjusted 1,9%.
Analysts said the number did not bode well for the country’s economic growth outlook for the year.
”That’s a bad number, significantly lower than what we expected. It will impact on our forecast for economic growth for the whole year,” said Nico Kelder, economist at Efficient Group.
Manufacturing is the second-biggest sector in Africa’s biggest economy after financial services, accounting for nearly 17% of gross domestic product.
Expansion in the sector slowed to 4,7% in the first quarter of this year, from 8,3% growth in the fourth quarter of 2006.
Africa’s biggest economy has expanded by about 5% of gross domestic product (GDP) a year for the past three years, but higher interest rates are widely expected to curb robust domestic demand in 2007, slowing growth.
”I think this will mean slower GDP growth. This is partly in response to the global economy’s reaction to higher interest rates,” said Colen Garrow, economist at Brait, referring to an upward rates cycle in most industrial nations. — Reuters