Economy growth held back – SA Reserve Bank

2013-12-04 08:39

The growth of the South African economy was held back and activity slowed in the third quarter of 2013, the SA Reserve Bank has said.

“Given the tepid growth registered in the third quarter of 2013, the level of real gross domestic production in the first three quarters of 2013 was only 1.9% higher than in the corresponding period of 2012.

“Growth in the South African economy has been held back by supply constraints in recent quarters, and real production is consequently expected to remain subdued in 2013 as a whole,” the bank said in releasing the December 2013 quarterly bulletin yesterday.

In the second quarter of 2013, economic activity increased by 3.2% while the growth in real gross domestic product (GDP) decelerated to an annualised rate of 0.7% in the third quarter of 2013.

The bank said the slower growth in the third quarter reflected a contraction in the real output of the secondary sector.

Conditions in the mining sector improved in the third quarter of 2013 after severe strike-related labour disruptions in the second quarter.

“As a result, mining production rebounded, increasing at an annualised rate of 11.4% in the third quarter.

“Solid increases in the production of diamonds, platinum and gold more than offset slower growth in coal and other mining production.”

The total mining output contributed 0.6 of a percentage point to overall economic growth in the third quarter of 2013. In the second quarter it subtracted 0.3 of a percentage point.

The bank said the expansion in the manufacturing output in the second quarter was short-lived after the production in the sector was negatively affected by strike action in August and September.

“After having added 1.7 percentage points to overall growth in real gross domestic product in the second quarter of 2013, the contraction in manufacturing output subtracted 1 percentage point from the growth in the third quarter.

“Subsequent to a brisk increase of 11.7% in the second quarter of 2013, real manufacturing output declined at a rate of 6.6% in the third quarter.”

In the third quarter production was held back by the strike action.

The utilisation of production capacity in the manufacturing sector slowed from 81.3% in the second quarter of 2013 to 81.2% in the third quarter.

The sector supplying electricity, gas and water saw growth momentum in the third quarter of this year. After a 5.1% increase in the second quarter, the growth in real value added slowed to an annualised rate of 3.8% in the third quarter of the year.

“Activity in civil construction was adversely impacted by industrial action at larger project sites including Eskom’s Medupi and Kusile power stations,” the bank said.

“While construction activity in the residential building segment continued to expand at a moderate pace, non-residential building activity slowed during the period.”

The growth in aggregate real gross domestic expenditure moderated from an annualised rate of 2.7% in the second quarter of 2013 to 1.9% in the third quarter.

“This was the net result of a slower pace of increase in real final consumption expenditure by households and general government which more than offset an acceleration in real gross fixed capital formation alongside stronger real inventory investment.”

Real growth in household consumption expenditure dropped to 2.9% year-on-year from 3%.

Investec group economist Annabel Bishop said the current account deficit widened as exports and manufactured goods were afflicted by strikes and imports of petroleum products and capital equipment rise, despite the recalculated trade deficit.

Household debt as a percentage of disposable income was 75.5% in the third quarter, down from 75.8% in  the second quarter.

The current account deficit widened to 6.8% of GDP from the second quarter’s 5.9% of GDP.

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