Strikes saw slowest rate of economic growth in years

ECONOMIC growth slowed last year to its lowest rate since 2009 as strikes in mining and manufacturing crippled production and demand remained weak.

Gross domestic product (GDP) data from Statistics SA showed yesterday that, although the economy grew sharply in the final quarter of the year, this was not enough to significantly lift the overall growth rate for the year.

The economy expanded by a seasonally adjusted and annualised 4.1% in the fourth quarter compared with a revised 2.1% (1.4%) in the third.

Growth, however, slowed to 1.5% last year from 2.2% in 2013.

Nominal GDP was estimated at R3.8-trillion for last year.

Although analysts expect economic growth to improve this year, they say several challenges will mean growth is likely to remain below the full potential of 2.5%.

Old Mutual Wealth investment analyst Izak Odendaal said tax increases and double-digit electricity tariff hikes were likely to limit consumer spending, while rolling electricity blackouts would probably restrict job creation.

Stats SA said the largest contributions to the quarter-on-quarter growth of 4.1% were as follows: the manufacturing industry contributed 1.2 percentage points based on growth of 9.5%; the mining and quarrying industry contributed 1.1 percentage points based on growth of 15.2%; and finance, real estate and business services contributed 0.7 of a percentage point based on growth of 3.5%.

A leading indicator of economic activity released by the Reserve Bank yesterday suggested that economic growth would be weak over the next few months.

The composite leading business economic indicator fell by 1% year on year in December to 99.9 points after a 0.1% year-on-year contraction in November.

The indicator fell by 0.9% on a month-on-month basis in December after seven of the 10 component time series that were available for the survey decreased, while three increased.

The largest negative contribution came from a decrease in the number of residential building plans passed, while the largest contributor was an acceleration in the 12-month percentage change in the number of new passenger vehicles sold.

– BDlive

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