South Africa’s GDP Grows at Slowest Pace Since RecessionFranz Wild and Mike Cohen
South Africa’s economy, the largest on the continent, grew at the slowest pace since a 2009 recession in the first quarter as manufacturing output slumped.
Gross domestic product growth slowed to an annualized 0.9 percent from 2.1 percent in the fourth quarter, Statistics South Africa said in a report released in Johannesburg today. The median estimate of 15 economists surveyed by Bloomberg was 1.6 percent.
“This points to a very weak 2013,” Elna Moolman, an economist at Macquarie Group Ltd. in Johannesburg, said in a phone interview. “There are two risks to the economy coming up: labor unrest and electricity” outages.
The economy has come under strain after a series of mining strikes last year caused more than 10 billion rand ($1.04 billion) in lost output and shaved about 0.5 percentage point off the growth rate, according to the National Treasury. While the unrest has eased this year, it may pick up as wage negotiations in the mining industry get under way.
The rand weakened to its lowest since March 2009 against the dollar following the release of the data, falling as much as 1.4 percent to 9.7465. The currency traded 1.2 percent lower at 9.7261 per dollar at 12:25 p.m. in Johannesburg trading.
Forward-rate agreements starting next February, used to speculate on interest rates, fell as much as 2 basis points, or 0.02 percentage point, today to 4.98 percent.
Manufacturing, which accounts for more than 15 percent of the economy, contracted an annualized 7.9 percent in the first quarter after expanding 5 percent in the previous three months. Agriculture, forestry and fishing fell 4.9 percent in the period, while mining and quarrying jumped an annualized 14.6 percent.
The loss in manufacturing output was due to maintenance and fire-related stoppages, Gerhard Bouwer, an executive manager at the statistics agency, told reporters in Johannesburg.
“There was a lot of loss to production,” Bouwer said. “There were a lot of stoppages due to maintenance of plants. In mines, there were stoppages on fires.”
A fire halted operations at Sibanye Gold Ltd.’s Beatrix West operations on Feb. 19, resulting in the loss of 61 kilograms (134 pounds) of gold every month. A Feb. 9 blaze shut ArcelorMittal South Africa Ltd.’s steelmaking operations for about three months.
The Reserve Bank on May 23 cut its forecast for economic growth this year to 2.4 percent from 2.7 percent and projected economic expansion of 3.5 percent in 2014. The bank kept the benchmark repurchase rate at 5 percent, where it has been since July last year, concerned that a weaker rand and higher wages will push inflation above its 3 percent to 6 percent target.
“The MPC is increasingly concerned about the deteriorating outlook for the South African economy,” the bank’s Governor Gill Marcus told reporters. “There are a number of critical domestic issues that are contributing to the vulnerability of the economy that need to be urgently addressed.”