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Johannesburg - SA's gross domestic product (GDP) rebounded sharply in the second quarter, rising by 4.9% compared with a dismal increase of 2.1% in the first quarter.
The main reason for the rebound was the return to more normal levels of production in the mining and manufacturing industries after the power outages in the first quarter.
The increase in GDP was higher than the Reuters consensus forecast of 4.5% but lower than the I-Net Bridge survey of economists which suggested growth would top 5%.
The main contributors to the increase in GDP in the second quarter was the manufacturing sector (2.3 percentage points), mining (0.8 percentage points), finance, real estate and business services (0.5 percentage points) and agriculture (0.5 percentage points), construction (0.4 percentage points) and communications (0.4 percentage points). This was partially offset by a decline in the wholesale and retail sector, and zero percent contribution from electricity, gas and water.
Standard Chartered economist Razia Khan said: "There is a lot of good news on the supply side, helping to compensate for weakness in demand. The key going forward is whether this sort of growth performance can be sustained. Growth was always going to be favourable, given that it reflected recovery from an exceptionally weak first quarter."
She said the data should give a near-term lift to equities, and would also be positive for the rand. The figures, despite their strength, didn't alter her view that the Reserve Bank was done tightening policy for now.
T-Sec economist Mike Schü'ssler said the rebound in mining and manufacturing was "stunning". However, one had to bear in mind that these figures were quarter-on-quarter, seasonally adjusted and annualised growth figures. If one looked at mining on a year-on-year basis, the performance was less than encouraging - a decline in 0.7% for the first half of the year.
"The figures need to be taken with a pinch of salt," Schü'ssler said, predicting full-year growth of 2.8%.
Standard Bank economist Danelee van Dyk was more optimistic about full-year growth, expecting 3% with a possibility of a surprise on the upside.
She warned against expecting the second quarter growth performance to last into the third quarter, saying that manufacturing and mining would struggle after notching up growth rates of 14.5% and 15.6% respectively in the second quarter. She said government's contribution to GDP was surprisingly low, and the decline in the retail sector was also worse than she had expected.
- Fin24.com