WE already knew annualised GDP growth doubled to 4.1% in the fourth quarter of 2014 (4Q14) from 2% in the previous quarter, but we didn’t as yet know its full composition (though we could guess).
In the end I didn’t guess hard enough. Fully 3.9% of the 4.1% growth gain was contributed by net trade, meaning the 15% mining output growth and the 9.5% manufactured output growth had very large post-strike recoveries in them that went into export recovery even as import growth fell off.
This left very little contribution to be made by domestic demand, growing a minuscule 0.3% in the quarter. It wasn’t if all the spending categories didn’t show gains: households growing 1.6%, government 1%, capital formation 2.6% and inventories rising, as that the residual item (unexplained statistical corrections) wiped out nearly all these overall gains.
The 4Q14 was a net trade recovery quarter, finish & klaar.
This came out nicely in the current account data that pleased all round. The current account deficit (annualised) shrunk to 5.1% of GDP from 5.8%, with the trade deficit shrinking to 0.9% of GDP from 2%.
These improvements were centrally due to post-strike export recovery in mining and manufacturing, plus the much lower oil prices.
The overall picture would have been even better if it wasn’t for a spike in dividend outflows by non-listed companies, raising the invisible deficit to 4.2% of GDP from 3.8%.
This spike is not expected to be sustained, and with ongoing better trade data the current account deficit in 2015 can keep narrowing towards 4.5% of GDP from 5.4% last year.
The financing of the current account deficit in 4Q14 wasn’t particularly transparent, with less than half visible financing identified. The remainder was loans and fully a third was unrecorded transactions, again suggesting that the underlying realities facing us may not be as dire as often assumed.
Certainly not a picture overall that warrant credit rating agencies to downgrade or the rand to be sold off, which during the quarter moved mostly sideways on trade-weighted, even if firming against the euro and weakening against the dollar, mostly because of events overseas rather than in our own backyard.