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The South African economy grows to 3.8%

by , 25 February 2014

Earlier today, Stats SA released the rate of economic growth for the final quarter of 2013. The gross domestic product (GDP) data exceeded the expectations of economists. The lack of strikes over the quarter helped boost growth. Let's take a closer look at what the data reveals…

Over the last three months of 2013, the “economy grew by 3.8%,” reports IOL. That’s in comparison to the 0.7% seen in the third quarter of the year.

Economists surveyed by BDLive had forecast economic growth to have grown by 3.4%. The predictions ranged from 1.5% to 4.2%.

So a rate of 3.8% was above consensus.

The main reason for the boost in growth is down to the end of strikes, which affected the mining and manufacturing sectors, notes Bloomberg. For the whole of 2013, “the economy grew 1.9% …. [that’s] down from 2.5% in 2012”.

An economist at Citigroup, Gina Schoeman, said with the lack of strike action, production could “grow at ‘normalised’ levels,” adds Bloomberg. This also showed “’the economy’s potential’ without the interference of strikes”.

Looking closer at the figures, the main factors contributing to the rise in “economic activity were manufacturing,” notes IOL. It added 1.8%. Mining and quarrying added 0.8%. The only “negative contribution” was from the “electricity, gas and water industry,” which lost 0.1%.

Forecasts for economic growth for 2014

An economist at Macquarie Securities, Elna Moolman, said the increase from the third quarter to the fourth quarter was slightly higher than forecast, notes BDLive. But she said they “remain cautious about growth prospects for 2014”. Especially as the “Reserve Bank’s leading business cycle indicator,” also released this morning, showed “continued weakness”.

An analyst at ETM Analytics, Manisha Morar, said they “don’t expect this print to extend into the first half of this year based on weaker fundamentals,” adds BDLive. There are many issues that could have negative impact.

So good news that the economy grew more than expected. But expectations aren’t high that the first quarter of 2014 will get off to such a good start.



The South African economy grows to 3.8%
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