South African third-quarter growth rose to an annualised 4,7%, beating forecasts and backing the case for another interest-rate hike next week.
Statistics South Africa on Tuesday said the annualised quarter-on-quarter growth in real gross domestic product (GDP) has increased to 4,7% in the third quarter of 2007, compared with a downwardly revised 4,4% in the second quarter of 2007.
Analysts had expected a slowdown to 4,2% due to slower consumer demand on the back of higher interest rates.
The unadjusted year-on-year figure was also above predictions at 5,1%.
“From a broad perspective it’s a very strong number. It’s a lot stronger than the market anticipated,” ETM economist Russell Lamberti said.
“It certainly bodes [ill] for further interest-rate hikes down the line.”
South Africa’s central bank has raised its repo rate by 150 basis points to 10,5% since June to tame accelerating inflation and strong consumer spending.
The CPIX (consumer inflation less mortgage costs) inflation rate moved further outside the bank’s 3% to 6% band to 6,7% year-on-year in September, raising speculation the repo could rise again next week.
A further increase in inflation is forecast in data to be released for Wednesday.
Statistics South Africa said financial services — the economy’s biggest sector — and construction remained the main drivers of growth, with manufacturing suffering from a stronger currency and strikes during the quarter.
“Although other sectors are showing a slowdown, faster growth in the finance sector is pulling everything up and the main reason for the faster growth is corporate investment,” said Kedibone Mokone, Statistics SA manager for GDP.
Growth for calendar year 2006 was revised upwards to 5,4% — a near three-decade record — from 5%. — Reuters