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GDP grows 2.1% in fourth quarter

Feb 26 2013 11:48 Reuters

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Pretoria - South Africa's economic growth quickened to 2.1% quarter-on-quarter in the fourth quarter of 2012 on a seasonally adjusted and annualised basis from 1.2% in Q3, Statistics South Africa said on Tuesday.

On an unadjusted year-on-year basis, the economy grew 2.5% in the fourth quarter from 2.3% in the previous three months.

The economy grew by 2.5% in 2012 from 3.5% the previous year, the statistics agency said.

A Reuters poll of 14 economists showed growth was expected to quicken to 1.6% in the fourth quarter.

The rand firmed against the dollar to R8.7835 from R8.8475, while the yield on the benchmark 2026 government bond edged up to 7.215% from 7.21% beforehand.

Said Elize Kruger, economist at Kadd Capital, "It shows that we had a bit of life in our manufacturing sector, which helped to offset the negative impact of the declining output in the mining industry. If you just look at mining, it would have been a worse outcome.

"So we had a couple of sectors that added positively in contributing to offset the impact of the mining sector's performance.

"On the 2.5% for 2012 I would like to say that this remains a mediocre growth performance for South Africa and too low to help us to finance our social economic problems.

"A disappointing outcome, unfortunately looking forward we are not majorly positive about 2013, expecting growth at 2.7%. Obviously we need a lot more growth to help us grow ourselves away from our problems."

Said Elna Moolman, economist at Renaissance Capital, "The key reasons for the out performance versus our forecasts was the stronger-than-expected performance of the agricultural sector and a shallower-than-expected contraction in mining GDP.

"Despite the stronger-than-expected Q4 GDP growth, we still expect only a modest acceleration in growth in 2013 to around 2.7% from 2.5% in 2012.

"In terms of our view that consumer spending will continue to slow, the moderation in the wholesale and retail sector is important. On a year-on-year basis, the sector stagnated in Q4."

Recovery in South Africa's economy has been hesitant since a 2009 recession. The central bank cut interest rates by 50 basis points in July to help support economic growth but high inflation has prevented further monetary easing.

A festering debt crisis in Europe, which takes in a quarter of South Africa's exports, is weighing on domestic growth prospects, while six months of violent strikes in the mining and farming sectors have put an added drag on prospects for growth.

The Finance Minister will likely cut growth projections at his 2013 Budget Speech on Wednesday.

The ministry has said the economy needs to grow by 7% on a sustained basis to make a dent on a 25% unemployment rate.



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sa economy  |  gdp
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