Fin24

Sarb sees lower economic growth

2012-10-30 19:32

Pretoria - A report issued by the SA Reserve Bank on Tuesday sees economic growth slowing.

"Domestic economic activity is expected to moderate from the second to the third quarter of 2012," the bank said in its Monetary Policy Review for October.

The review is released twice a year and sets out the Reserve Bank's thinking on economic growth and inflation.

South Africa's real gross domestic product (GDP), the sum total of all goods and services produced in the economy during the period, rose in the second quarter, driven by the primary sector which includes mining and agriculture.

However, if this sector was excluded, growth in the rest of the economy slowed from 3.9% in the first quarter of 2012 to 1.6% in the second quarter.

The construction sector picked up, but electricity, gas and water, and manufacturing, declined. Trade and finance and business services decelerated.

Inflation is expected to remain within the bank's target range of between four and six percent.

Headline CPI was forecast at an average of 5.6% in 2012, slowing to 5.2% and 5% in 2013 and 2014 respectively.

Core inflation, stripping out food, petrol and electricity prices, was expected to peak at 4.9% in the final quarter of this year, compared to the previous forecast peak of 5.4%.

It was expected to average 4.6% in both 2013 and 2014.

Risks to the inflation forecast were viewed as more or less balanced.

Higher petrol and anticipated higher food prices were being offset by demand pressure and excess capacity. A depreciating rand could, however, increase inflationary pressures, the central bank said.