South Africa's GDP contracts by 1.3% in the second quarter of 2015

Posted On Tuesday, 25 August 2015 20:18 Published by
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South Africa’s seasonally adjusted real Gross Domestic Product (GDP) at market prices contracted by 1.3% in the second quarter of 2015, Statistics South Africa (Stats SA) said on Tuesday.


“The seasonally adjusted real GDP at market prices for the second quarter of 2015 decreased by an annualised 1.3% compared with an increase of 1.3% during the first quarter of 2015. GDP has slowed down,” Statistician General Pali Lehohla said.

Briefing reporters in Pretoria, the Statistician General said that mining and agriculture industries at -6.8% and -17.4% had been very lacklustre when coming to growth rates for the second quarter of 2015 quarter-on-quarter.

“The real economy has not actually performed that well,” he said.

According to Stats SA, the seasonally adjusted real annualised value by the primary and secondary sectors recorded decreases of 9.3% and 4.7% respectively, while the tertiary sector recorded an increase of 1.1% during the second quarter of 2015.

The unadjusted real GDP at market prices for the second quarter increased by 1.2% and the estimate of GDP for the first six months of 2015 increased by 1.6% compared with the corresponding period in 2014.

Meanwhile, the nominal GDP is estimated at R991 billion for the second quarter of 2015, which is R26 billion less than the first quarter.

Asked about whether he was surprised by the data, Lehohla said that he was agnostic about the numbers.

“Are we likely to see ourselves in a recession? We use a rear mirror view to understand what is happening in the country,” he said, adding that the National Development Plan (NDP) has set targets for the country.

The NDP aims for a South African economy that grows at no less than 5% a year.

“The NDP has set itself a particular target and a negative 1.3% quarter-on-quarter and is annualised and the more realistic figure which is year-on-year which is 1.2%, that is still very far from the 5% growth.

When you take the cumulative effect of 5% growth and 1.2% growth cumulatively even if the starting bases are the same the gap widens because of the cumulative effect of growth itself. The point then is that we are not making it towards the NDP target and in fact it is in the real economy where growth quarter-on-quarter is negative and sluggish,” explained Lehohla.

In its weekly economic monitor on Monday, Nedbank economists had predicted GDP growth of 0.3%.

“We expect GDP growth to slow to 0.3% on a quarter-on-quarter seasonally adjusted annualised basis in the second quarter from 1.3% in the first quarter,” said the economists.

At the Reserve Bank’s Monetary Policy Committee (MPC) meeting in July Governor Lesetja Kganyago revised down the central bank’s growth forecast to two percent in 2015.

On Tuesday, economists at Nedbank said the economic outlook remains relatively weak.

“Apart from the adverse effects of electricity supply shortages and fading competitiveness, the world economy has also become less supportive.

"The global stock market rout, uncertainty around the pace of US monetary policy normalisation, risk-averse global investors, signs of a steeper deceleration in Chinese economic activity and the continual slide in global commodity prices are likely to hurt domestic confidence, undermine capital expenditure, aggravate unemployment, add to inflation, push interest rates higher and limit economic growth.

"We still forecast GDP growth of 2 % in 2015 as a whole followed by a slower 1.8 % in 2016.”

The economists said the chances of faster and steeper rate hikes have increased with the rand's sharp depreciation.

Last modified on Wednesday, 26 August 2015 08:45

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