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South Africa’s economic growth slows to four-year low

South Africa’s economy, the biggest on the continent, grew at the slowest pace in more than four years in the third quarter as labour strikes weighed on output.

Gross domestic product rose an annualised 0.7% compared with a revised 3.2% in the three months through June, Statistics South Africa said in a report released in Johannesburg today. The median estimate of 19 economists in a Bloomberg survey was 1%.

Strikes by workers at carmakers in the third quarter curbed output from an industry that accounts for almost 10% of the economy.

The Reserve Bank last week cut its 2013 economic growth forecast to 1.9% from 2%, and kept the benchmark repurchase rate at the lowest level in more than three decades to help support consumer spending.

Sluggish growth
Growth has been sluggish "largely due to strike activity and its impact on manufacturing production," Johann Els, an economist at Old Mutual said before the data was released.

"We are not overly optimistic about a rebound in the fourth quarter’s GDP growth despite manufacturing production normalising after a disrupted third quarter."

Consumer and business confidence in Africa’s largest economy remained close to record-low levels in the fourth quarter.

While the economy is forecast to grow at the slowest pace since a 2009 recession this year, the Reserve Bank said there is no room for cutting interest rates as further rand weakness may fuel inflation.

The currency’s 16% slide this year against the dollar is the most of 16 major currencies tracked by Bloomberg. – Bloomberg

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Rene Vollgraaff
Guest Author

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