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Slowdown in all economic sectors

Cape Town - All sectors of the economy have shown a slowdown in economic activity in response to still-sluggish global economic growth and supply-side disruptions, Finance Minister Pravin Gordhan said on Wednesday.

In his 2013 mini budget, he said production stoppages had been most pronounced in mining and manufacturing.

"This has created considerable volatility in GDP, as declines in one quarter are followed by growth in the next - a pattern that prevents the economy from sustaining higher growth momentum."

Structural changes were under way in the mining sector, with rising demand for coal and iron ore.

The share of iron ore in total mining increased from 3.1% in 2000, to 14.4% in 2010 - the last year for which data was available - supported by expanded rail and port capacity, as well as strong demand from China.

In contrast, platinum production was under pressure due to escalating costs and labour unrest.

The performance of the gold sector reflected the impact of strikes and lower prices, as well as longer-term trends, such as declining ore grades and deeper shafts.

Real value added in the sector decreased by an annualised 5.6% in the second quarter of this year, after increasing by 14.6% in the first.

Agricultural output grew by 3.6% in the first half of 2013, in comparison with the same period last year.

Over the medium-term, agriculture would be supported by continued growth in African markets, improved management of water resources, better integration of small-scale farmers through market access and financial support, and resolution of outstanding land claims.

The manufacturing sector contracted by an annualised 7.9% in the first quarter of this year, following large-scale maintenance stoppages, but rebounded to an annualised 11.5% growth in the second quarter.

Investment was rising in the food, paper products, fuel and motor vehicle sub-sectors.

Manufacturing growth should increase as labour disputes were resolved, domestic supply constraints addressed, and improving global conditions boosted demand for South African exports.

An unplanned outage at the Koeberg nuclear power plant near Cape Town, and Eskom’s increased summer maintenance programme, contributed to a decline of 0.2% in the electricity sector over the first eight months of this year, compared to the same period a year earlier.

A tight electricity demand-supply balance was expected to persist until Medupi’s first 800MW unit came on-line during the second half of 2014.

Growth in the rest of the economy remained subdued, with the services sector recording growth of 2.2% in the first half of the year relative to the same period last year.

Finance, real estate and business services growth slowed from 3.8% in the first half of 2012, to 2.7% over the same period this year.

Transport, storage and communication, wholesale and retail trade, and personal services recorded growth rates of between 1.8% and 2%.

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