South Africa’s economy grew at a slower rate in the first quarter of 2012, but not as slowly as analysts had forecast, with mining production contracting but manufacturing showing considerable resilience.
The economy grew by 2.7% in the first quarter on a seasonally adjusted and annualised basise, compared with 3.2% growth in the fourth quarter of 2011, Statistics South Africa (Stats SA) said in a statement on Tuesday.
This was better than analysts’ forecast of 2.4%, with manufacturing being the surprise following a poor monthly showing in March.
“We know mining was weak because of all the closures and strike activity, especially around platinum,” Stanlib chief economist Kevin Lings told reporters. “The other sectors held up reasonably well, especially manufacturing.”
Manufacturing showed growth of 7.7% in the first quarter, while finance, real estate and business services grew at 4.1%.
The wholesale, retail, motor trade and catering as well as accommodation grew by 3%, while government services showed growth of 2.3%. Transport, storage and communication grew by 2.5%
However, mining and quarrying contracted by 16.8% in the first quarter. Kedibone Mabaso, GDP manager at Stats SA, attributed the fall to lengthy strike action in the sector.
Nedbank economists said the economy was still expected to show moderate growth, reaching 2.7% in 2012.
“But the outlook is becoming increasingly murky, with Europe’s debt woes threatening to derail the global recovery and undermine local exports,” the bank cautioned, adding that mining, manufacturing and agriculture would remain under pressure.
If problems in Europe persisted and resulted in capital expenditure cutbacks and retrenchments, South Africa’s domestic spending would also be hurt and the growth outcome would be much weaker than is currently anticipated.
“Given the softer growth trend locally and an increasingly uncertain global environment, with turmoil in Europe and signs of softer activity in most key emerging market economies, the Reserve Bank’s monetary policy committee is likely to maintain its accommodative monetary policy stance until the downside risks to global and local growth fade and more compelling signs of momentum emerge,” Nedbank said.
“Interest rates are likely to remain on hold at current low levels until March next year.”