SA economy's record expansion

30 November 2006

South Africa's economy continued growing apace in the third quarter, shrugging off a string of interest rate hikes to notch up its 32nd quarter of uninterrupted growth since 1998 - the longest upswing in the country's history.

According to figures released by Statistics South Africa on Tuesday, the economy grew by an annualised 4.7% in the third quarter, down from a revised 5.5% in the previous three months.

The figure was higher than the 4.6% growth forecast by most economists, prompting Finance Minister Trevor Manuel to remark that the government's 4.4% growth target for this year might be "on the low side".

Growth figures revised upwards
Stats SA also released its annual gross domestice product (GDP) growth revisions on Tuesday, with the new data indicating that the economy is growing faster than previously thought.

South Africa's GDP growth rate for 2004 has been revised upwards from 4.5% to 4.8%, and for 2005 from 4.9% to 5.1%, making last year the economy's fastest growing year in about 25 years.

"The data also suggests that, despite a moderate slowdown this year, the economy is still extremely strong," Manuel told reporters after a meeting with the Federation of Unions of SA in Roodepoort, west of Johannesburg on Tuesday.

This, he said, put the government in a better position to achieve the targets set out in the Accelerated and Shared Growth Initiative for SA (Asgi-SA), a strategy to boost growth to an average annual 4.5% until 2010 and 6% thereafter in order to halve poverty and unemployment by 2014.

Construction boosts growth
According to Business Report, Stats SA's latest figures show that the construction industry is boosting the country's growth, with construction activity rising by 14.3% in the third quarter, and real value added by the industry over the first three quarters rising by 13.2% compared to the first nine months of 2005.

The government, partly in preparation for the 2010 Fifa World Cup, plans to spend in the region of R410-billion on infrastructure development over the next three years.

In the light of this it was not surprising, Stanlib economist Kevin Lings told Business Report, that the order books of the country's major construction companies were "already full for the next two years."

A booming finance and insurance sector also saw the country's finance, real estate and business services sector rising by 5.9% in the third quarter compared with the second.

Manufacturing was up by an annualised 4.7% in the third quarter, while mining and quarrying rose 3.3%.

"The only drag on growth was the agricultural sector, which decreased 12.9% during the third quarter," Business Report states, adding that Stats SA had attributed this to the poor performance of field crops. reporter

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An automotive factory in the Eastern Cape. A surge in vehicle production helped South Africa's manufacturing sector to rebound in 2006 (Image: Eastern Cape Development Corporation)
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