South Africa’s economy, the largest on the continent, expanded at a faster pace in the fourth quarter than the previous three months as manufacturing rebounded after strikes and consumers boosted spending.
Growth in gross domestic product accelerated to an annualized 3.2 percent from a revised 1.7 percent in the previous three months, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 15 economists was for growth of 3.1 percent.
Factory output expanded last quarter as interest rates at the lowest level in more than 30 years spurred spending, while mining grew for the first time in a year. Growth is still less than half the government’s targeted expansion of 7 percent, with the debt crisis in Europe undermining South Africa’s recovery, Finance Minister Pravin Gordhan said on Feb. 22.
“We’ve seen a recovery in manufacturing from the strikes” in the first half of last year, Elna Moolman, an economist at Renaissance Capital in Johannesburg, said in a telephone interview. “But given the slowdown we’re seeing globally, we’re unlikely to see much growth in that sector.”
The rand strengthened to 7.5213 against the dollar as of 12:16 p.m. in Johannesburg from 7.5333 before the data was released. The yield on the R157 government bond, due 2015, fell 1 basis point, or 0.01 percentage point, to 6.66 percent today.
Gordhan is struggling to boost growth as a possible recession in Europe lowers demand from a region that buys a third of South Africa’s manufactured goods.
The economy will probably expand 2.8 percent this year, Moolman said, above the 2.7 percent forecast by the government. The economy grew 3.1 percent in 2011, the statistics office said today.
Manufacturing, which makes up 15 percent of the economy, expanded an annualized 4.2 percent in the fourth quarter compared with a contraction of 0.7 percent in the previous three months, the statistics office said. Mining rebounded from an 18 percent contraction in the third quarter to grow 0.7 percent.
Consumer spending, which makes up two-thirds of expenditure in the economy and has led a recovery from recession in 2009, is benefiting from rising wages, low interest rates and an increase in credit. The central bank has kept its benchmark interest rate unchanged at 5.5 percent since November 2010.
The retail industry rose an annualized 5.2 percent last quarter from a 6.1 percent in the previous three months, the statistics office said. Financial services increased 2.3 percent from 4.5 percent in the same period.