South Africa’s economy grew by 2,6% in the third quarter of 2010 on a seasonally adjusted and annualised basis, compared to a downwardly revised 2,8% expansion in quarter two, data showed on Tuesday.
This compared to a revised 3,1% in the second quarter of 2010.
A Reuters poll of 15 economists last week forecast a 3,2% gross domestic product growth in quarter three on a seasonally adjusted and annualised basis, and predicted a 3,5% rise on a year-on-year basis unadjusted.
‘Real hard time from the strong rand’
Mike Schussler, an economist at economists.co.za told I-Net Bridge the figure confirmed the economy was continuing to slow down.
“… it suggests to us that the production parts of our economy are facing a real hard time from the strong rand, higher production costs and lower productivity.”
Annabel Bishop, an economist from Investec Group added: “Q3.10 saw significantly slower growth due to base effects and the turn in the inventory cycle. Household spending is unlikely to have provided a counter-balance, due to high private sector debt and related servicing costs, along with still high levels of unemployment.
“Surviving companies are typically not employing or investing until the recovery proves sustainable. Firms continue to reduce costs and remain cautious with operating surpluses.
“We continue to expect that growth for 2010 will average a weak 2,8% year-on-year, with growth in Q4.10 only very slightly stronger than Q3.10. We also continue to expect a 50 basis points cut in interest rates in the first quarter of 2011, which could come as early as the January monetary policy committee meeting. If the cut does not occur in January 2011 then it is likely in March 2011.”
Nicky Weimar, senior economist at Nedbank, said the number had been “generally anticipated by us”.
“We have seen a general loss of momentum, and although it is a weak number, it was largely expected. I think the latest rate cut took this number into consideration.”
Elize Kruger, Economist at KADD Capital, said the figure was worse than they had expected and justified last week’s rate cut.
“It shows broad based fragile recovery,” said Kruger.
Pan-African Capital Holdings Economist Dr Ayodele Akambi said the figure was in the range of their estimates.
“We were anticipating the 2,4% growth in the third quarter, given the weaker trend in the manufacturing production and other data points in the economy in the second half of 2010.” — Reuters, I-Net Bridge