South Africa’s economic growth rate accelerated to 4,9% in the second quarter of 2008 on a seasonally adjusted and annualised basis, official data showed on Tuesday, partly due to a rebound in the manufacturing and mining sectors.
Statistics South Africa said Q2 GDP on a seasonally adjusted and annualised basis jumped from a six-and-a-half year low of 2,1% in the first quarter, which resulted in part from declines in manufacturing and mining related to an electricity crunch.
The number was above the forecast from a Reuters poll of economists, which saw the economy growing by 4,1%.
On an unadjusted basis, South Africa’s economy grew by 4,5% compared to the second quarter of 2007.
Colen Garrow, economist at Brait, said the numbers were ”respectable”.
”However they still don’t change the interest-rate outlook. We still need to do a lot of work to elevate these numbers.”
George Glynos, market analyst at ETM, said: ”For us the figure is a little disappointing. We were looking at a figure close to the 5,5% to 5,7% mark. But it seems that what caught us out is the poor growth in wholesale, retail and hotels, which surprised us to the downside. We thought there might be more resilience there.
”All in all, this still highlights the growth concerns in the economy and shows that the Reserve Bank did the right thing in holding off [with an interest rate hike].”
Chris Hart, economist at Investment Solutions, said the figure emphasised that South Africa had a ”two-speed economy”.
”Some sectors face recession if they are not in recession already, but others are showing good growth. The agricultural industry for example has seen tractor sales up 50% despite the fall in vehicle sales. The strong upsurge in agriculture suggests that the sector is positioning itself to take advantage of high food prices.
”Mining would rebound from the first quarter after power constraints shut down mines for five days in January, and the manufacturing sector is surprisingly strong. Third quarter growth is likely to be lower. This emphasises that overall the economy is unlikely to go into recession, despite some sectors hurting.”
Nicky Weimar, economist at Nedbank, said the numbers were stronger than they had anticipated.
”The surprise however is agriculture, which looks good. The decline in retail trade was, however, expected.”
Annabel Bishop, economist at Investec, said: ”Substantial load shedding in Q1.08 was responsible for the marked slowdown in that quarter and the resultant base effect caused the sharp pick-up in growth in Q2.08.
”Excluding the base effect, Q2.08’s GDP growth figure would have been closer to 3,4% q/q saa [our expected growth rate for the whole of 2008], indicative of demand continuing to wane in the face of high interest rates.
”The underlying trend of the production side of the economy shows growth is not robust enough to prove the recent Monetary Policy Committee interest rate decision to have been anything else but the correct one to take at the present time — we continue to believe interest rates will remain unchanged in H2.08 and expect a 50bp cut in April 2009.” – I-Net Bridge, Reuters