GDP beats market expectations

Tuesday, February 23, 2010

Pretoria - South Africa's Gross Domestic Product in the fourth quarter of 2009, which is up 3.2 percent, has exceeded market expectations.

"The seasonally adjusted real GDP at market prices for the fourth quarter of 2009 increased by an annualised rate 3.2 percent compared with the third quarter of 2009," Statistics South Africa (Stats SA) announced on Tuesday.

In the third quarter, the economy grew by 0.9 percent signaling that South Africa was technically out of its first recession in 17 years.

Contributing factors to the GDP figure was the growth in the manufacturing sector (contributing 1.5 percent points), general government services (contributing 1 percent) and the construction sector.

Market expectations were that the economy would grow by 2.5 percent quarter on quarter.

Nedbank economist Carmen Altenkirch said: "It beat market expectations with manufacturing rising by 10.1 percent quarter on quarter. In contrast, domestic retail trade is lagging in the recovery because households are remaining cautious."

Altenkirch however added that the economy would gain momentum with GDP accelerating in the first, second and third quarter of 2010.

Standard Bank economist Danelee van Dyk described the data as "encouraging" but warned that this would not translate into massive job creation.

"One should not be too optimistic that the figures will infuse new life in the labour market, the recovery is still tentative," she said, adding that in some sectors there will be employment.

"It is not all doom and gloom but it is not an absolute booster of employment," she told BuaNews.

She said 2010 will be the foundation year for the consolidation of the economy, adding that income growth would gain momentum in 2011.

The South African Chamber of Commerce and Industry (SACCI) welcomed the improvement in figures saying it had been its opinion that the recovery would be led by the manufacturing sector.

"This also reinforces the Department of Trade and Industry's focus on manufacturing in its Industrial Policy Action Plan that was recently released for comment." However, he said the economy still remains vulnerable.

Sectors that contributed negatively to the GDP were wholesale, retail, motor trade, accommodation and agriculture among others.