South Africa’s gross domestic product (GDP) grew by a meagre 1.5% in 2014, lower than the 2.2% growth of 2013 and well below the 5.5% growth target set out by government in its National Development Plan.
The main contributors to the increase in economic activity in 2014 were general government services, contributing 0.5 of a percentage point; and the finance, real estate and business services, contributing 0.4 of a percentage point.
However, the mining and quarrying industry made a negative 0.1 percentage-point contribution for the full year.
Stats South Africa (SA) further revealed that GDP had expanded by 4.1% quarter-on-quarter in the three months to December 31, with the nominal GDP estimated at R979-billion for the quarter – R16-billion higher than in the third quarter of the year.
The main contributors to GDP growth for the quarter were the manufacturing industry, contributing 1.2 percentage points, based on growth of 9.5%, followed by the mining and quarrying industry, which contributed 1.1 percentage points. The third-biggest contributor to GDP during the quarter was the finance, real estate and business services sector, which contributed 0.7 percentage points.
Despite the sharp rebound in the mining industry, with 15.2% growth experienced in this quarter, the sector still had lower seasonally adjusted quarterly value than it had in 2005, contributing only R227-billion, compared with the R246-billion it recorded then. It is, however, a significant increase from the R218-billion it contributed in 2009.
Meanwhile, the manufacturing sector grew by 9.5% in the fourth quarter. Speaking to Engineering News Online, Stats SA executive manager: national accounts Gerhardt Bouwer said the growth was bolstered by the industrial strikes in the mining industry coming to an end.
“When there were ongoing strikes in the platinum, gold and coal sectors, the manufacturing sector’s growth tapered.” He illustrated that for the first three quarters of 2014, the manufacturing sector had recorded quarter-on-quarter contractions of 6.4%, 4% and 1% in the seasonally adjusted real annualised change.
Further, seasonally adjusted real annualised value added by the primary, secondary and tertiary sectors recorded increases of 13.3%, 7.2% and 1.8% respectively in the fourth quarter of 2014.
Nomura analyst Peter Attard Montalto warned that the 2015 first quarter GDP figures were likely to be negatively impacted by the regular load shedding implemented by electricity utility Eskom.
“However, we think [the fourth-quarter GDP data] does reinforce the theme that South Africa is not currently suffering from a massive output gap and that normalisation is still the operative word for the Monetary Policy Committee as core inflation remains sticky,” he added.
Meanwhile, BNP Paribas Cadiz Securities economist Jeffrey Schultz noted that it was “clear from the year-on-year growth breakdown” that the services sector remained the backstop to overall economic growth and activity.
“With security of electricity supply becoming more tenuous, the risk of further strike activity flaring up later this year and persistently weak demand and activity conditions, the outlook for domestic growth remains riddled with obstacles. We, therefore, maintain our below consensus 2% growth forecast for 2015,” he added.