South Africa's economic growth slowed in the first quarter of 2012, hit by a sharp contraction in mining, but manufacturing showed surprising resilience, suggesting the Reserve Bank might not need to cut interest rates to stimulate output.
The economy grew by 2.7 percent quarter-on-quarter on a seasonally adjusted and annualised basis in Q1, surpassing analysts' forecasts of 2.4 percent and compared with a 3.2 percent rise in the fourth quarter of last year, Statistics South Africa said on Tuesday.
On an unadjusted year-on-year basis, economic growth was at 2.1 percent in Q1 from 2.9 percent in the fourth quarter.
A Reuters poll of 12 economists last week forecast quarter-on-quarter growth of 2.4 percent in Q1 while year-on-year expansion was seen at 2.2 percent.
“Better than what most people were looking for. The surprise would be manufacturing being as strong as it was simply because we saw quite a shock number for the March number so clearly it wasn't quite as badly as impacted,” said Kevin Lings, chief economist at Stanlib.
“We know mining was weak because of all the closures and strike activity, especially around platinum. The other sectors held up reasonably well especially manufacturing.”
The mining sector shrank by 16.8 percent during the quarter but factory output, which accounts for about 15 percent of GDP, was up 7.7 percent.
Economic growth remains hesitant after the continent's largest economy came out of its first recession in nearly two decades in 2009.
The central bank last week said the risks posed by Europe, which absorbs a quarter of South Africa's exports, has “intensified” since its previous monetary policy meeting.
The bank opted to leave interest rates at a 30-year low of 5.5 percent last week as expected to try and support the economy, even as inflation remains at the upper end of its target range.
The central bank cut its 2012 growth forecast slightly to 2.9 percent from 3 percent previously, while the International Monetary Fund and the Finance Ministry expect 2.7 percent growth. - Reuters