Pretoria - South Africa's real gross domestic product (GDP) rose by 2.6% in the third quarter of 2010 from a revised 2.8% (3.2%) in the second quarter, Statistics South Africa (Stats SA) data showed on Tuesday.
GDP growth was expected at 3.2% quarter-on-quarter (q/q). The range of forecasts among the economists was from 2.9% q/q to 3.6% q/q.
The GDP figures showed that South Africa's economic recovery is modest, Statistics SA deputy Director General for economics statistics, Dr Rashad Cassim, said on Tuesday.
Cassim added that the local economy is 'far' from reaching government's objective of a 7% growth rate per annum.
"This (growth figure) is reflecting that recovery is not as simple as we thought it would be. The recovery remains modest. There's a plateauing of the GDP," Cassim said.
Government forecasts that South Africa will need to grow at annual rates of 7% or more if it is to eradicate poverty and unemployment.
The manufacturing sector continues to struggle amid weak global demand and the strong rand.
"The strong value of the rand may have had an impact on manufacturing," Cassim said.
However, SA is still expected to see positive growth in 2010 and the consensus among economists is for a 3% growth rate.
Unadjusted year-on-year (y/y) GDP in the third quarter was placed at 2.6%, from 3.0% in the second quarter.
The main contributors to the increase in the third quarter were
mining and quarrying with 1.5 percentage points, wholesale, retail,
motor trade and accommodation (0.4), agriculture, forestry and fishing
(0.4), finance, real estate and business services (0.3), and transport,
storage and communication (0.3). Manufacturing contributed -0.8.
Mike Schüssler, economist at Economists.co.za, said: "The figure confirms that the economy continues to slow down and it suggests to us that the production parts of our economy are facing a real hard time from the strong rand, higher production costs and lower productivity."
Efficient Group economist Freddie Mitchell said the GDP figure was below market consensus.
"This doesn't augur well for job creation and the employment situation. The data indicates that economic growth is less buoyant than initially thought."
Nicky Weimar, senior economist at Nedbank, said the figure showed "a general loss of momentum".
"I think the latest rate cut took this number into consideration."
KADD Capital economist Elize Kruger said GDP was "worse than expected and justifies last week's rate cut. It shows broad-based fragile recovery."