GDP & Growth

extract from MMS Service 10-July-01
Summary : Indications so far suggest that growth will be significantly below 3%, but probably above 2.5%. Unless government starts spending on capital goods and infrastructure the growth will be low, not high.
.
1st QTR: There is no doubt that economic growth lost momentum. Y-O-Y: Real GDP growth was 3%, y/y, as compared to 2.9% in the previous qtr. The most recent peak in y/y growth occurred at 3.2% in the 3rd qtr of last year. Q-O-Q: In terms of q/q annualised growth the rate was 2.0% in the 1st qtr, as compared to 3.2% in the previous qtr. The most recent peak occurred at 3.9% in the 3rd qtr of 2000.

Initial indications for the 2nd QTR:
Data published so far suggest that growth was probably worse in the 2nd qtr.

(a) The q/q growth in manufacturing output was negative if the February-April period is compared to the November-January period.

(b) Electricity output has shown a similar weak pattern of growth into May.

(c) Retail sales for February/April were only 0.1% higher than for the preceding three months. This is an improvement on the decline from the 4th to the 1st qtr.

(d) Car sales clearly showed a decline during the last couple of months.

(4) If q/q growth was significantly lower in the 1st quarter and even lower in 2nd qtr, what is the outlook for the second half of the year? Only a fundamental assessment will yield and answer.

(5) Export slowdown: There is little doubt that export growth is falling due to lower world economic growth. This can be seen the SARB export data for the 1st qtr, the beginnings of slower growth in nominal exports (monthly foreign trade data) and the poor growth of the metal processing sectors in manufacturing.

(6) Consumer spending growth was not as weak as retail sales showed in the 1st qtr and will grow at a steady pace of more than 2.5% during the year as a whole. The fundamentals (disposable income growth and interest rates) remain sound, though retrenchments are hurting.

(7) Fixed investment in the 1st qtr was healthy, but indicators published so far show that there was no acceleration in the 2nd qtr.  Imports of machinery grew at declining rates.

 

| Macro | Financial | Growth | Retail | Motor | Printing | Back |

   Back to top of page
e c o n o m e t r i x 10-Jul-01