SA economy expanded in 4th quarter - Sarb | Fin24
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SA economy expanded in 4th quarter - Sarb

Mar 17 2015 19:03

Cape Town - Economic activity expanded at a significantly firmer pace in the fourth quarter of 2014, the SA Reserve Bank (SARB) said on Tuesday.

In its latest Quarterly Bulletin, it said real gross domestic product (GDP) increased at an annualised rate of 4.1%, almost double the rate of increase recorded in the third quarter.

The acceleration largely reflected a rebound in sectors producing goods, following severe strike-induced disruptions earlier in 2014.

Mining production increased at a moderate rate in the third quarter of last year before picking up pace in the fourth quarter.

Pronounced increases in the production of platinum group metals and diamonds more than offset decreases in the production of coal and other mining commodities.

"At the same time, the pace of increase in the real value added by the agricultural sector slowed somewhat, mainly as a result of lower growth in field crop production."

Growth in the manufacturing sector rebounded strongly in the fourth quarter. Growth in the construction sector also picked up because of momentum in civil construction and increased activity in residential and non-residential building.

"Real domestic final demand maintained its upward momentum in the final quarter of 2014, led by higher growth in both household consumption expenditure and aggregate capital spending.

Relatively favourable prices partly encouraged a notable increase in expenditure on durable and semi-durable goods over the period.

Higher spending on non-durable goods partly reflected the benefit of some windfall gains following lower domestic petrol prices.

Fixed capital formation increased somewhat faster in the fourth quarter.

"Growth in fixed capital spending by private business enterprises accelerated moderately over the period, buoyed mainly by increased spending in the mining, manufacturing, trade, and finance sectors."

Fixed capital formation by public corporations maintained its underlying momentum, dominated by spending in the transport and electricity sectors.

"By contrast, growth in real gross fixed capital outlays by general government slowed over the period."

Inflationary pressures moderated notably from the middle of last year.

"The recent moderation was mainly driven by a deceleration in non-durable goods price inflation, primarily of petrol and food."

Underlying consumer price inflation remained just below the upper limit of the inflation target range, while the outlook for the price of fuel and some categories of food had recently deteriorated somewhat.

The volume of merchandise imports grew at a notably slower pace than that of merchandise exports in the fourth quarter.

"Export volumes benefited from the normalisation of production in the mining and manufacturing sectors, a marginal improvement in the country's terms of trade, and the more competitive exchange value of the rand."

Credit extension to the household sector remained quite weak while bank loans and advances to companies gained some momentum.

South African bond yields moved generally lower from early 2014, in line with US bond yields.

"Bond yields edged higher in early March 2015 as a reversal in the oil price, the announcement of higher levies on fuel and rand depreciation impacted on inflation expectations."

On the real estate market, the bank said the rate of increase in house prices remained slightly ahead of consumer price inflation.

sarb  |  sa economy


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