GDP rises by 2.1% in fourth quarter of 2012

"The seasonally adjusted real GDP for the fourth quarter of 2012 increased at an annualised rate of 2.1%," said Gerhardt Bouwer, executive manager for national accounts at Stats SA.

On a quarter-on-quarter basis, the 2.1% growth beat market expectation of a 1.6% growth.

The main contributors to the 2.1% increase in the fourth quarter were manufacturing (0.8%), finance, finance, real estate and business services (0.6%) and general government services (0.4%).

The growth in manufacturing was led by strong growth in the production of petroleum and basic iron and steel among others while growth in finance, real estate and business services was due to increased activities in commercial banks.

Mining and the quarrying industry recorded a negative contribution of 0.5% while the contributions made by the electricity, gas and water industry as well as the construction industry were insignificant.

In 2012, real annual GDP increased by 2.5% following an increase of 3.5% in 2011.

Finance, real estate and business services, manufacturing and general government services and trade were the main contributors to the increase.

"As was widely expected, the economy recorded only moderate growth of 2.5 % in 2012 as a whole, down from 3.5 % in 2011. The steadier albeit bland performance was mainly due to higher production by the agriculture and manufacturing sectors, while the slump in mining production continued as the wildcat strikes persisted well into the final quarter. Most of the other sectors produced mixed results, but growth rates remained generally modest." said Nebank economists.

Economists expect much of the same in 2013 with strain on the mining and manufacturing sectors most probably set to continue.

"Producers and exporters face another difficult year as the recession in Eurozone is forecast to continue and local operating conditions are expected to remain challenging given high electricity costs, strained labour relations, fading productivity and inadequate economic infrastructure. These constraints are generally expected to offset most of the benefits of a weaker rand."

The economists noted that the pace of economic activity remains modest and unbalanced.

"Although domestic spending was moderated, it continued to outpace production, despite improvements in agriculture and manufacturing output. This suggests that the underlying pressure on the current account and the rand is unlikely to ease in the near future. Given the circumstances, the neutral policy stance remains the best option for the MPC [Monetary Policy Committee], buying some time for a fragile economy to recover more convincingly," noted Nedbank.

Government has previously said that the economy needs to grow by 7% a year in order to make a dent in the fight against unemployment.

At the first MPC meeting of 2013 in January the Reserve Bank cut the forecast for economic growth this year to 2.6% from 2.9%.