OECD sees South Africa’s economy growing 2.8% in 2013, 4.3% in 2014

By bne IntelliNews May 30, 2013

South Africa’s economic growth is expected to speed up from 2.5% last year to 2.8% this year and further to 4.3% in 2014 on the back of a weaker rand and a pick-up in world trade, which should stimulate exports, the Organisation for Economic Cooperation and Development (OECD) said in its latest Economic Outlook.

In 2012, South Africa’s GDP growth remained below potential for the sixth year in a row, mainly due to weak export growth, the report said. Production and exports remained subdued at the beginning of 2013 due to capacity constraints in the electricity sector.

The country’s economy expanded by 0.9% q/q and by 1.9% y/y in Q1 2013, at the slowest pace of growth since the country rebounded from the 2009 recession, due to a sharp, 7.9% q/q contraction of the manufacturing sector. But the expected installation of new electricity generation facilities should support a pick-up in economic growth. The anticipated growth in exports will also help narrow the current account deficit from a projected 6.9% of GDP for 2013 to 6.6% in 2014.

The OECD projected South Africa’s headline inflation to rise from 5.6% last year to 6.5% in 2013 and then fall back to 5% in 2014. It recommended that the South African Reserve Bank (SARB) should explore room for monetary policy easing, as the slack in the economy and fiscal tightening should contain inflationary pressures, while guarding against the possibility of the recent spike in inflation feeding into inflation expectations. Last week SARB kept its key repo rate unchanged at 5%, saying the scope for further monetary easing was constrained by a weakening rand and upside risks to inflation despite sluggish economy.

The OECD expects South Africa’s fiscal deficit to shrink from 5.6% in 2012 to 5.2% this year and further to 4.4% in 2014. It said that the gradual fiscal consolidation, which focuses on restraining spending, should be accelerated, although the automatic stabilisers should be allowed to support the economy if growth turns out lower than expected.

Related Articles

UK’s Vedanta Resources to invest $1bn in Zambian copper mine

The UK-listed diversified resource and mining company Vedanta Resources will invest $1bn in its Zambian mining unit Konkola Copper Mines (KCM), creating 7,000 jobs, the mining firm said in a ... more

Almaty cost of living lowest among major cities

Kazakhstan’s largest city and business centre Almaty has dropped to last place on the Economist Intelligence Unit’s bi-annual ranking of the ... more

AB InBev sells 54.5% stake in African Coke bottling business for $3.15bn

Anheuser-Busch InBev will sell a 54.5% stake in Africa's largest Coke bottler to Coca-Cola Company for $3.15bn, the two companies said in a joint statement on December 21. The deal is expected to ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss