GDP rises to 3.2% in 2011 fourth quarter

"The seasonally adjusted real GDP at market prices for the fourth quarter of 2011 increased an annualised rate of 3.2% compared with an increase of 1.7% revised from an increase of 1.4% during the third quarter of 2011," Stats SA's executive manager of national accounts, Gerhardt Bouwer, said on Tuesday, 28 February.

The 3.2% was slightly better than the market expectation of a 3.1% quarter-on-quarter increase.

Contributors to the quarter-on-quarter growth were the wholesale, retail and motor trade, catering and accommodation industry, contributing 0.7% followed by the manufacturing industry and general government services each contributing 0.6%.

Growth in manufacturing was led by strong growth in the production of basic iron and steel, among others. The finance, real estate and business services also contributed, followed by the transport, storage and communication industry. However, in the fourth quarter the agriculture sector fell by 5%.

The first preliminary annual estimates showed that the economy grew by 3.1% in 2011.

"The estimates indicate that the real annual GDP at market prices for 2011 increased by 3.1% compared with 2010 when the real annual economic growth rate was 2.9%," said Bouwer.

Finance, real estate and business services contributed 0.7% based on an increase of 3.5% contributing to increased economic activity in 2011. General government services and the wholesale, retail and motor trade, catering and accommodation industry each contributed 0.5%, followed by manufacturing which contributed 0.4% based on an increase of 2.4%.

The country's nominal gross domestic product at market prices in 2011 was R3 trillion. This is R303 billion more than in 2010.

In 2011, general government services expanded by R49 billion to R434 billion while the wholesale, retail and motor trade, catering and accommodation industry expanded by R44 billion to R386 billion. Finance, real estate and business services expanded by R43 billion to R565 billion and the mining and quarrying industry expanded by R33 billion to R260 billion.

Nedbank economists said slower growth is expected in 2012 with lower demand from European countries likely to contain exports and production in the agriculture, mining and manufacturing sectors.

Consumer spending is expected to support domestic trade, while value added by general government - which has expanded rapidly - is likely to moderate due to budget constraints.

"Overall GDP growth is expected to slow to 2.7% in 2012 as a whole," noted the economists, adding that the data confirms the South African economy remains vulnerable.

Standard Bank said it remains of the view that the repo rate at 5.5% will remain unchanged for 2012.

"Despite sub-3% GDP growth expected this year, we believe that sluggish economic growth will prove insufficient to sway the SARB in favour of a rate cut, given the expected protracted breach of the upper inflation target. Inflation is expected to remain above 6% throughout this year," noted the bank.