SOUTH AFRICA – South Africa’s economy escaped recession in the second quarter of 2014, although figures showed economic growth was very weak, crippled particularly by strike action in the platinum sector in the first half of 2014.
Real gross domestic product (GDP) increased by 0.6% on a quarter-on-quarter and seasonally adjusted and annualised basis in the second quarter of 2014 after contracting by 0.6% in the first quarter.
Statistics South Africa released the figures on Tuesday.
The 0.6% increase was against a BDlive median consensus forecast of 0.85% from a survey of 14 economists. The forecasts among the economists ranged from -0.1%-1.8%.
Economic growth in the second quarter was supported by finance and business services; transport, storage and communication; and general government services, while production was unsurprisingly disappointing in the mining and manufacturing sectors.
The strike at platinum mines, which ended on June 25, also affected output at manufacturing plants.
Stats SA said the declines in mining output were not only strike related, but were also affected by safety stoppages.
The unadjusted real GDP for the second quarter of 2014 increased by 1% compared with the second quarter of 2013, Stats SA said.
The estimate of GDP for the first six months of 2014 increased by 1.3% compared with the corresponding period in 2013.
Macquarie Securities economist Elna Moolman said the weaker economic growth trajectory and “lingering downside growth risks” added more support to the view that the interest rate hiking cycle was likely to be “very gradual”.
She expected “at most” another interest rate increase of 25 basis points this year amid moderating inflation.
Inflation as measured by the consumer price index eased to 6.3% year on year in July from 6.6% in June.