Johannesburg - The Bureau for Economic Research (BER) has raised its gross domestic product (GDP) expectations for this year by 0.1 percentage points to 3.8%, it said in its economic prospects report released on Tuesday.
Better-than-expected first-quarter outcomes for household consumption and fixed investment were the main reasons behind the upward revision.
The BER said the data already released for the second quarter, especially for manufacturing production, suggested that second-quarter GDP growth moderated from the 4.8% growth in the first quarter.
"Stronger growth in the key domestic demand categories of GDP shows up in a sharper import gain, which in the GDP arithmetic subtracts from overall growth," said BER senior economist Hugo Pienaar.
Household spending was forecast to ease in 2012, largely due to base effects and slower growth in real disposable income.
The negative impact on overall GDP growth was limited by imports growing less than previously forecast, Pienaar said.
"Combined, the result is that GDP growth is set to ease slightly to 3.7% during 2012," Pienaar said.
Consumer price index (CPI) inflation forecasts were slightly higher, as the BER expected higher commodity and electricity prices to start impacting a broader range of prices. CPI was projected to average 5.2% and 5.9% respectively during 2011 and 2012, from 5.0% and 5.8% previously.
CPI would likely peak at a higher average of 6.5% during the fourth quarter of 2011 and first quarter of 2012, before easing to an average of 6% in the second quarter of 2012 and 5.5% in the final quarter of 2012.
Better-than-expected first-quarter outcomes for household consumption and fixed investment were the main reasons behind the upward revision.
The BER said the data already released for the second quarter, especially for manufacturing production, suggested that second-quarter GDP growth moderated from the 4.8% growth in the first quarter.
"Stronger growth in the key domestic demand categories of GDP shows up in a sharper import gain, which in the GDP arithmetic subtracts from overall growth," said BER senior economist Hugo Pienaar.
Household spending was forecast to ease in 2012, largely due to base effects and slower growth in real disposable income.
The negative impact on overall GDP growth was limited by imports growing less than previously forecast, Pienaar said.
"Combined, the result is that GDP growth is set to ease slightly to 3.7% during 2012," Pienaar said.
Consumer price index (CPI) inflation forecasts were slightly higher, as the BER expected higher commodity and electricity prices to start impacting a broader range of prices. CPI was projected to average 5.2% and 5.9% respectively during 2011 and 2012, from 5.0% and 5.8% previously.
CPI would likely peak at a higher average of 6.5% during the fourth quarter of 2011 and first quarter of 2012, before easing to an average of 6% in the second quarter of 2012 and 5.5% in the final quarter of 2012.