South Africa's third quarter GDP growth slows to 0.2%

Special Report:Global Financial Crisis

By Li Jianmin

JOHANNESBURG, Nov. 25 (Chinese media) -- South Africa's economic growth rate slowed to 0.2 percent in the third quarter of the year, Statistics South Africa said on Tuesday.

This compared to real annualized growth rates of 1.6 and 5.1 percent in the first and second quarters of the year.

According to the Nedbank Group Economic Unit, increases in agricultural output and construction activities were the main drivers of growth during the third quarter.

However, activities in the manufacturing and mining sectors fell sharply, with whole value added by the broader domestic trade and accommodation industries also dropping sharply.

Mining production fell off a relatively higher base, mainly due to declines in the production of coal, gold, other metal ore and other mining and quarrying, Nedbank said.

In addition, restricted electricity supply continued to hamper the industry.

Manufacturing output contracted by 6.9 percent, reflecting a broad-based decline in the sector's sub-categories as higher inflation, interest rates and household debt contained domestic demand, while weak global demand also contributed.

However, the growth in the agricultural sector increased by an impressive 16.1 percent, on the back of increases in field crops, horticulture and animal products, the bank added.

Construction remained robust, growing by 15 percent quarter-on-quarter, as it continued to benefit from strong fixed investment activities in preparation for the 2010 FIFA World Cup, as well as the Eskom and Transnet's capital expenditure programs.

The electricity, gas and water industries recorded the growth of 3 percent after declining by 5.8 percent and 2.1 percent in the first and second quarters. "The rebound was mainly due to the increase in electricity production," Nedbank said.

The transport and communication industries also fared "relatively well", supported by land transport services and communication services.

General government services increased by 3.9 percent, after expanding by only 2.5 percent in the second quarter.

Weak household demand for credit and housing contained growth in the finance, real estate and business services industries to 3.2 percent in the third quarter.

Nedbank said that the outlook for the economy remained bleak. "Further weakness is expected over the next few quarters, and the risk of recession has clearly increased given the dramatic deterioration in the global economy. "

"Consumer-oriented sectors, especially wholesale and retail trade, accommodation, finance and real estate, selected manufacturing industries and transport and communications, will increasingly feel the effects of falling household demand," said Nedbank. Mining and manufacturing were likely to remain weak due to unfavorable global conditions.

Nedbank forecast that the economy would grow by 3.2 percent and a very modest 1 percent in 2008 and 2009, respectively.

According to the bank, the latest data confirmed that the economy was weak and that some industries were already in recession.

While potential rand weakness remained a worry, the local and global environment appeared increasingly deflationary, Nedbank said.