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Analysis: 2012 Q2 GDP figures

South Africa

South Africa

Analysis: 2012 Q2 GDP figures

On Tuesday StatsSA released the latest GDP figures. Covering the April to June quarter, the release showed that the economy had grown 3.0% quarter-on-quarter (QoQ), up from 0.9% in the previous quarter. It looks like a strong number but QoQ growth is quite volatile. Longer-term trends show that the economy remains weak and it’s too soon to call a recovery. By PAUL BERKOWITZ.

The latest GDP figures show that the South African economy grew 3.0% on a QoQ, annualised basis. It’s the highest growth rate in a year:

Most of the overall growth came from a stonking 11.5% growth in the manufacturing sector, across a wide range of sub-sectors. Steady growth in the financial and trade sectors also lifted economic growth.

The QoQ growth in manufacturing is the highest in over two years, but it follows a quarter of the largest contraction since the 2008/09 recession in the sector. Much of the latest quarter’s growth is a recovery from that.

Some of it may be due to the rand’s weakness through May and June. The currency has remained weak through July and has weakened further in August. If there is any boost to manufacturing exports from this it should be apparent in the growth figures for the second half of 2013.

The year-on-year (YoY) growth figures show a more reliable trend and are compared with the QoQ growth in the graph below:

It’s clear from the YoY numbers that overall growth has been slowing since 2011. The latest YoY growth is 2.0%. This is roughly in line with analysts’ forecasts for overall growth for 2013. There’s a consensus that growth will range from 2.0% to 2.5% for 2013. Most calls are closer to 2.0% than to 2.5%.

We do have strike season coming up and negotiations are not expected to be friendly. Output could be seriously knocked. Two more quarters of strong manufacturing growth are necessary to lift growth for the year, but this is not likely. Steady growth in mining is a dream made of similar stuff.

The waters are choppy with strike action and negotiated settlements. October will bring the mini-budget which in turn may bring some assistance to the manufacturing and mining sectors. After that we’ll already be looking forward to next year’s numbers and the hope of better news. DM

Photo: Contractors work on the construction of a blast furnace used for smelting to produce iron, Thursday, 29 March 2007 at Mittal Steel’s plant in Vanderbijlpark. The steel producer is commencing with construction of two new kilns, an essential part of the manufacture process, at the plant at a cost of R600 million to increase its liquid steel capacity by approximately 250 000 tonnes per year. Picture: Werner Beukes


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