South Africa’s Economy Expands 2.1% in Fourth QuarterAndres R. Martinez and Mike Cohen
South Africa’s economy, the continent’s largest, grew at a faster pace in the final quarter of last year than the previous three months as manufacturing and agricultural output expanded, the statistics agency said.
Gross domestic product rose an annualized 2.1 percent from 1.2 percent in the third quarter, Statistics South Africa said in a report released today in Pretoria, the capital. The median estimate of 20 economists in a Bloomberg survey was for growth of 1.7 percent. The economy grew 2.5 percent for the whole of last year, down from 3.5 percent in 2011.
South Africa’s economy is expanding at less than half the pace President Jacob Zuma says is necessary to slash a 24.9 percent jobless rate, the highest of more than 30 emerging-market nations tracked by Bloomberg. Work stoppages that began at platinum mines in August spread to gold shafts, while thousands of truck drivers went on strike last quarter over higher pay, disrupting output.
“While better than expected, overall growth remained sluggish over the final quarter,” Adenaan Hardien, chief economist at Cadiz Holdings Ltd. in Cape Town, said in e-mailed comments. “The manufacturing sector performed better than was expected. Although mining remained a drag on overall GDP, it was less so than over the third quarter. Transport and financial services also performed better. We expect growth to continue its recovery through 2013.”
Mining strikes cost the economy more than 10 billion rand ($1.1 billion) in lost output and exports and shaved about 0.5 percentage point off GDP last year, according to estimates from the National Treasury.
Mining fell an annualized 9.3 percent in the fourth quarter, while electricity slumped 2.2 percent, the statistics agency said. Manufacturing expanded by 5 percent, agriculture by 10 percent, finance by 2.9 percent and transport by 1.9 percent.
The rand strengthened as much as 0.9 percent against the dollar and traded 0.4 percent higher at 8.8264 at 1:45 p.m. in Johannesburg. Yields on the government’s benchmark 10.5 percent bonds maturing in March 2026 rose one basis point, or 0.01 percentage point, to 7.23 percent.
In January, the Reserve Bank cut its forecast for economic growth this year to 2.6 percent from 2.9 percent, while Zuma told Parliament on Feb. 14 that the economy is likely to expand 2.5 percent this year.
GDP needs to increase an average 7 percent a year through 2020 to cut the jobless rate to 14 percent, according to government estimates.
The Reserve Bank has kept the benchmark repurchase rate at 5 percent since a surprise cut in July, concerned that a weaker rand and higher wages will push inflation above the 3 percent to 6 percent target band.