South Africa's economic growth eased to 4% in the fourth quarter of 2004 from the meteoric 5.7% growth rate of the third quarter, Statistics SA reported on Tuesday.

The latest gross domestic product (GDP) figures brought average GDP growth for 2004 to a four-year high of 3.7%, compared with 2.8% growth in 2003.

According to Business Day, this was considerably better than the government's projections, and could see Finance Minister Trevor Manuel cutting his budget deficit forecasts in the 2005/06 Budget.

At the same time Business Day reports, the latest GDP figures came in slightly below market expectations, fuelling calls for an interest rate cut.

According to Stats SA, the main contributors to the increase in economic activity last year were wholesale trade, retail trade, hotels and restaurants (0.9%); finance, real estate and business services (0.7%); transport, storage and communication (0.5%); and manufacturing industries (0.4%).

However, the primary and secondary sectors "took a pounding from the strong rand" in the fourth quarter, Business Day reports, with manufacturing, agriculture and mining all slumping from the third quarter.

"All the more export-oriented sectors slowed down", Azar Jammine of Econometrix told Business Day, "which tells you the strength of the rand is having some effect on production.

"Those export-oriented sectors also tend to be the most labour-intensive, so when talking about job creation ... there is an argument for loosening monetary policy."

Source: BuaNews

SA economy South Africa is the economic powerhouse of Africa, with a gross domestic product four times that of its southern African neighbours and comprising 25% of the entire continent's GDP.

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