South Africa’s economic growth reached 3.8% in the last quarter of 2013, slightly above economists’ expectations, Statistics SA said on Tuesday.
In the previous quarter, growth had slumped, coming in at a meagre 0.7% — the lowest in the more than four years since the 2009 recession — as strikes hammered manufacturing output.
The country’s gross domestic product (GDP) for the fourth quarter had been expected to grow 3.4%, according to a BDlive poll of economists. Forecasts among the 11 economists ranged from 1.5% to 4.2%.
South Africa’s real annual GDP for 2013 overall increased 1.9% compared with 2.5% in 2012.
Quarter on quarter growth was “a touch higher” than expected, said Elna Moolman, an economist at Macquarie Securities, “partly owing to a post-strike recovery”.
“More importantly,” she said, “we remain cautious about growth prospects for 2014. Our concerns are underscored by the continued weakness in the Reserve Bank’s leading business cycle indicator this (Tuesday) morning, which we regard as a very reliable precursor to economic momentum six to nine months ahead.”
The Bank said on Tuesday that its composite leading business economic indicator — a guideline for economic activity and growth for at least six months ahead — had dropped 0.8% year on year in December, following a 0.1% decline in November.
“The good news is that there won’t be as many rate hikes as anticipated,” said Gina Schoeman, chief economist at Citigroup. “The (GDP) numbers were expected and were in line with inflation.
“The real question is, what is in store for the year ahead? The initial forecast of 2.8% annual growth has already been altered to 2.5%. If the current strike action continues along with high inflation, cramping domestic demand, we are at real risk of not growing by at least 2% again.”
Craig Pheiffer, head of Absa Private Client Asset Management, said the figure of 3.8% growth was “in line with our predictions and a strong showing”.
He added: “The better figure was the result of improved growth in manufacturing and mining, the two sectors underperforming last year. Together these two sectors contributed 2.6% of the cumulative 3.8%, with lesser contributions from retail and wholesale. It is a positive development that producers in the economy are making a comeback.”
Statistics SA said a rebound in the manufacturing sector contributed the most to economic growth in the fourth quarter with 1.8 percentage points. Mining and quarrying contributed 0.8 percentage points, while the wholesale, retail and motor trade; catering and accommodation industry; and finance, real estate and business services each contributed 0.3 percentage points.
A negative contribution was recorded by the electricity, gas and water industry (-0.1 percentage points).
Manisha Morar, an analyst at ETM Analytics, said: “We don’t expect this print to extend into the first half of this year based on weaker fundamentals. External demand for locally produced goods remains lacklustre at best and we still have a robust inflationary environment, which continues to erode households’ disposable income.”
Nicky Weimar, senior economist at Nedbank, agreed: “The pace of growth set in the fourth quarter is not likely to be repeated in the first quarter of this year given the protracted strikes in the mining sector and the slowdown in China.”
The unadjusted real GDP at market prices for the fourth quarter increased 2% compared with the same quarter a year before.
Statistics SA said the main contributors to the increase in economic activity in 2013 overall were finance, real estate and business services (0.5 percentage points); the wholesale, retail and motor trade, and the catering and accommodation industry (0.3 percentage points each); and the mining and quarrying industry, the transport, storage and communication industry and general government services (0.2 percentage points each).