SA growth to hit 5.1% for 2005
30 November 2005
Revised figures for the first and second quarters of 2005 show that growth in the South African economy is likely to hit 5.1% for the year, exceeding economists' most optimistic expectations and even Finance Minister Trevor Manuel's 4.3% forecast - and putting the government's stated 6% target well within reach.
On Tuesday, Statistics South Africa released new gross domestic product (GDP) figures, revising growth for the first quarter to 4.6% from 3.5% and for the second quarter to 5.4% from 4.8%. Growth for the first nine months of this year was estimated at 5.1% compared with the same period in 2004.
The economy grew by 4.5% in 2004, the fastest rate since 1984, up on the initial 3.7% estimate.
Growth in the third quarter of 2005 slowed to 4.2%, partly because of a strike in the gold-mining sector.
In July, President Thabo Mbeki appointed a high-powered task team, led by Deputy President Phumzile Mlambo-Ngcuka, to look at ways
to ramp South Africa's economic growth up to 6% by 2010 in order to boost employment and fight poverty.
The revisions show that the economy has been growing at an annualised 4% or higher in every quarter since the beginning of 2004 - and in some cases closer to 7%.
Bearing out the evidence
According to Business Day, economists said the revised numbers would raise the economy's prospects, help boost investor confidence and attract higher levels of foreign direct investment.
They also bear out what many economists have been saying: that anecdotal evidence suggests a faster-growing economy than indicated by the official statistics.
Record-breaking sales of new motor vehicles, huge cement sales, dramatically increased domestic air travel, surging retail sales and enormous growth in residential and business construction have been cited as proof that Africa's biggest economy is booming.
"There is a strong suspicion that the
economy is growing at a faster pace than what is actually being measured," Absa economist Chris Hart said on Classic FM radio.
"There is still strong underlying strength in the SA economy," Hart said. "I think we need to just reflect that just a year and a half ago a lot of people would have thought that 3% was the absolute growth ceiling, and here we are above 4%.
"It does seem to be sustainable, because it hasn't come with a runaway inflation level. The authorities are talking about 6% in a few years' time - I think that is still very attainable, given certain conditions."
Continuous growth since 1998
Brait economist Colen Garrow told Business Day that the new data revealed that the economy was "shaking off its mediocre performance, which characterised boom-bust periods prior to 1994".
"A 28th consecutive quarterly period of GDP growth since 1998 and an economy that remains in an upward phase of its business cycle are records
that are unlikely to go unnoticed by investors," Garrow said. "I'm optimistic we will breach that 6% growth target soon."
NKC economist Hugo Pienaar told the newspaper that growth of about 5% this year "should give government, and perhaps more importantly the business community, hope that the aim to reach 6% by 2010 is not a pipe dream".
In addition, Stats SA now says that the economy grew 3.7% in 2002 (previously thought to be 3.6%), 3% in 2003 (from 2.8%) and 4.5% in 2004 (from 3.7%).
Nominal GDP for 2002 is now estimated to be R4-billion, or 0.3%, higher at R1 169-billion, while GDP in 2003 was R6-billion higher, at R1 257-billion.
Last week, National Treasury director-general Lesetja Kganyago said the government had identified six impediments to its 6% growth target: currency volatility, infrastructure backlogs, the regulatory environment, delivery, skills shortages, and import parity pricing.
The positive new figures are likely to give impetus to
efforts to break through these barriers.
Improved statistics
According to statistician-general Pali Lehohla, the revised figures come out of Stats SA's "continuous improvement strategy for its economics statistics".
"The benchmarked and rebased GDP estimates [are] an output of this strategy," Lehohla said. "Economic activity is measured through surveys that differ in frequency.
"Short-term surveys entail monthly and quarterly data collection, while long-term measurement is undertaken biannually, annually or sometimes even less frequently.
"The use and analysis of a single data set cannot provide a solid basis for criticism of the complex and multisourced estimation of GDP," Lehohla said.
"The increase was mainly due to contributions of real value added by the manufacturing industry; wholesale, retail and motor trade, hotels and restaurants industry; finance, real estate and business services industry; transport, storage
and communication industry; and construction industry."
Stats SA also provided GDP figures for the provinces for last year.
"When comparing the real economic growth rates of the provinces in 2004 with 2003, Western Cape recorded the highest growth rate of 5.3%; followed by KwaZulu-Natal and North West with growth rates of 4.9% each, while Limpopo recorded the lowest growth rate of 2.7%" Lehohla said.
SouthAfrica.info reporter
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