GDP increase 3.2% in second quarter

This was slower than the first quarter when growth was recorded at 4.6%.

Main drivers

The manufacturing industry, the wholesale, retail motor trade and accommodation industry as well as general government services and finance were the main drivers of the increase. Mining and quarrying in contrast contributed a -1.1 percentage point.

"The unadjusted real GDP at market prices for the second quarter of 2010 increased by 3% compared to the second quarter of 2009. The estimates of GDP for the first six months of 2010 compared with the corresponding period of 2009 increased by 2.3%," GDP manager at Stats SA Kedibone Mabaso said at the release of the GDP in Pretoria on Tuesday.

Stats SA's Deputy Director General Rashad Cassim said the economy was slightly more resilient than what they had thought. "There is a consistent pattern," he said.

"The second quarter is far more impressive it's a signal of consolidation. It's an important message that there is growth in the economy," said Cassim.

He said that it was important to note that the impact of the first World Cup staged on African soil was spread out in quarters and that the impact could also be seen in data to be released in the third quarter.

Below expectation

The numbers came in slower than economists had expected, they were of the opinion that it would come in at 3.6%.

Nedbank economist Nicky Weimar said that a higher base and sharply lower mining output, which fell at an annual rate of 20.8%, were mainly to blame.

"The economy is expected to grow at a slightly slower pace in the second half of the year. Output by the mining and manufacturing sectors is likely to moderate as export sales slow on softer global growth and a strong rand, while activity levels in the service industries will be more contained as the boost from the World Cup is over and job creation remains slow while household debt is still high," she said.

The Reserve Bank's Monetary Policy Committee (MPC) is set to meet next month to deliberate on whether to keep interest rates as is. At their last meeting in July, the committee left rates unchanged at 6.5%. Since December 2008, the repo rate has been cut by 550 basis points.

"With economic growth losing momentum, inflation lower than expected and the rand at strong levels, the MPC is now likely to cut interest rates by another 50 basis points at the next MPC meeting if the July inflation numbers remain benign and the July credit figures remain weak," said Weimer.