South African Economy Expands at Slowest Pace in Four YearsRene Vollgraaff and Amogelang Mbatha
South Africa’s economy, the biggest on the continent, grew at the slowest pace in more than four years in the third quarter as strikes at carplants cut manufacturing output.
Gross domestic product rose an annualized 0.7 percent compared with the second quarter, when output increased a revised 3.2 percent, Statistics South Africa said in a report released in Johannesburg today. The median estimate of 19 economists in a Bloomberg survey was 1 percent.
Strikes by workers at carmakers including Bayerische Motoren Werke AG and Volkswagen AG in the third quarter curbed output from an industry that accounts for almost 10 percent of the economy. The Reserve Bank last week cut its 2013 economic growth forecast to 1.9 percent from 2 percent and kept the benchmark repurchase rate at the lowest level in more than three decades to help support consumer spending.
“The main reason for the slow growth was the bad manufacturing performance,” Ilke van Zyl, an economist at Vunani Securities Ltd. in Johannesburg, said by phone. “Apart from the strike action, private sector consumption growth slowed down, government expenditure slowed and there was heightened uncertainty in global financial markets”
Manufacturing output, which makes up 15 percent of the economy, declined an annualized 6.6 percent in the third quarter, the only industry to contract, according to the statistics agency.
“The strikes had a huge impact on the economy,” Gerhardt Bouwer, executive manager of national accounts at Statistics South Africa, said in an interview.
Strikes at carplants and auto-component makers cost the industry at least 20 billion rand ($2 billion) in lost revenue, according to the National Association of Automobile Manufacturers of South Africa.
Mining climbed an annualized 11.4 percent, agriculture gained 3.6 percent and construction increased 2.1 percent. General government services expanded 0.4 percent and the retail and finance industries rose 1.3 percent each.
Consumer and business confidence in Africa’s largest economy remained close to record-low levels in the fourth quarter.
While the economy is forecast to grow at the slowest pace since a 2009 recession this year, the Reserve Bank said last week there is no room for cutting interest rates as further rand weakness may fuel inflation.
The currency has slid 16 percent against the dollar this year, the most of 16 major currencies tracked by Bloomberg. It rose less than 1 percent to 10.0972 per dollar as of 1:18 p.m. in Johannesburg.
Revisions to trade data to include exports to and imports from Botswana, Lesotho, Namibia and Swaziland, announced two weeks ago by the South African Revenue Service, didn’t have a measurable effect on the GDP figures, Bouwer said.