South Africa’s Q4 GDP growth exceeds expectations as manufacturing, mining recover strongly

By bne IntelliNews February 24, 2015

A robust recovery of the manufacturing and mining industries helped South Africa’s economy grow 4.1% q/q on a seasonally adjusted and annualised basis in the fourth quarter of last year, speeding up from an upwardly revised 2.1% q/q growth in the preceding quarter, well above expectations, data from Statistics South Africa showed. Analysts polled by the Business Day predicted a 3.5% growth, while a Reuters poll suggested a 3.7% expansion. Q3 GDP growth was revised form an initial estimate of 1.4%.

The country’s full-year GDP growth slowed to 1.5% last year from 2.2% in 2013, but was above analyst and official estimates of a 1.4% expansion.

On an unadjusted y/y basis, the country’s real gross domestic product at market prices increased by 1.3% in Q3, decelerating from a revised 1.6% (from 1.4%) growth in Q3.

The main driver for the 4.1% quarterly GDP growth was the manufacturing industry (contribution of 1.2pp), which rebounded to a 9.5% growth after three consecutive quarters of contraction affected by strikes. The mining sector also outperformed, posting a 15.2% growth, up from 3.9% in Q3, and contributed 1.1pp to the overall development. Next, the finance, real estate and business services industry contributed 0.7pp to the overall GDP growth, on the back of a 3.5% expansion, up from 2.4% in Q3.

On a y/y basis, the best performing sectors in Q4 were agriculture (+4.2%), construction (+2.9%), and transport, storage and communication (+2.6%). On the opposite sides, the mining industry contracted 1.6% and the utilities sector shrank 0.9% y/y.

The nominal GDP at market prices was ZAR979bn ($84bn) in Q4, by ZAR16bn more than in Q3. The largest industries, as measured by their nominal value added in Q4, were finance, real estate and business services with a share of 20.7%, general government services with 16.9%, the wholesale, retail and motor trade and catering and accommodation industry with 16%, and the manufacturing industry with 13.7%. For the full-year 2014, nominal GDP was ZAR3.8trn.

South Africa’s GDP growth is expected to strengthen to around 2.2% this year, driven by improved labour relations, lower oil prices, and increasing exports, but constrained by electricity supply disruptions.

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