GDP rises to 2.7% in first quarter of 2012

"The seasonally adjusted real GDP at market prices for the first quarter of 2012 increased by an annualised rate of 2.7% compared with an increase of 3.2% during the fourth quarter of 2011," said Stats SA's executive manager of national accounts, Gerhardt Bouwer, on Tuesday, 29 May 2012.

Manufacturing showed growth of 7.7% in the first quarter, together with the finance, real estate and business services at a growth of 4.1%, formed part of the contribution to the 2.7% growth.

The wholesale, retail, motor trade and catering as well as accommodation grew by 3%, while government services showed growth of 2.3%. Transport, storage and communication industry grew by 2.5%

However, mining and quarrying in the first quarter contracted by 16.8% in the first quarter. Kedibone Mabaso, GDP manager at Stats SA attributed the fall to lengthy strike action.

Electricity, gas and water made no contribution for four consecutive quarters.

"Electricity production and use was low because of planned maintenance," Mabaso said, adding that the Koeberg nuclear plant in the Western Cape was shut down in March and is to reopen in June.

Unadjusted real GDP at market prices for the first quarter of 2012 increased by 2.1%. Market expectation was that GDP would rise to 2.4% quarter-on-quarter.

Nedbank economists said the economy was still expected to show moderate growth, reaching 2.7% in 2012.

"But the outlook is becoming increasingly murky, with Europe's debt woes threatening to derail the global recovery and undermine local exports," noted the bank, adding that mining, manufacturing and agriculture sectors will remain under pressure.

If problems in Europe persist and result in capital expenditure cutbacks and retrenchments, South Africa's domestic spending will also be hurt and the growth outcome will be much weaker than is currently anticipated.

"Given the softer growth trend locally and an increasingly uncertain global environment, with turmoil in Europe and signs of softer activity in most key emerging market economies, the Reserve Bank's Monetary Policy Committee [MPC] is likely to maintain its accommodative monetary policy stance until the downside risks to global and local growth fade and more compelling signs of momentum emerge.

"Interest rates are likely to remain on hold at current low levels until March next year," it noted.

The MPC will have its next meeting from 17 - 19 July 2012.