The South African economy showed growth in the first quarter of 2011 of 4.8 percent, Statistics South Africa (Stats SA) said on Tuesday.
“Real Gross Domestic Product (GDP) at market prices increased by 4.8 percent during the first quarter of 2011,” GDP manager at Stats SA, Kedibone Mabaso said.
GDP was expected to come in at 4.2 percent. “We were surprised by the number. It is a very good number and good showing by the manufacturing sector,” said Standard Bank senior economist, Dr Johan Botha.
According to Stats SA, contributors to the economic activity were the manufacturing sector, which contributed the most to the economy at 2.2 percent. This sector has a relative size of 15.1 percent of the economy. The finance, real estate and business services contributed one percent based on growth of 4.8 percent, followed by the wholesale, retail, motor trade and accommodation industry.
The seasonally adjusted real GDP at market prices for the first quarter of 2011 increased by an annualised rate of 4.8 percent compared with an increase of 4.5 percent (revised from an increase of 4.4 percent) in the fourth quarter of 2010.
Economic activity in agriculture, forestry and fishing industries reflected negative growth of 2.6 percent partly due to negative contribution by field crops. This could have been due to flooding experienced in January and February, said Mabaso.
“Agriculture has been doing well but it is very volatile,” said Botha.
In the first quarter, the seasonally adjusted real annualised value added by the primary, secondary and tertiary sectors recorded increases of 0.5 percent, 11.1 percent and 3.7 percent respectively.
“I think the economy is gaining traction now and the question is what the implication is for interest rates, making it more difficult for the MPC’s [Monetary Policy Committee] next meeting because growth is stronger than what was expected. The Reserve Bank may want to see another bout of strong growth before making a decision,” explained Botha.
However, Standard Bank is expecting that the MPC will keep rates as is until early January 2012.
Finance Minister Pravin Gordhan has previously said that South Africa’s economy needs to grow by about seven percent in order to tackle the country’s high unemployment rate. Government intends to create five million jobs by 2020.
“Growth is good no matter how small, however, we still have a long way to go,” said Botha.
The unadjusted real GDP at market prices increased by 3.6 percent in the first quarter of 2011.