Manufacturing Top Contributor to South Africa's Strong Growth

In the second quarter, the economy of South Africa grew 4.9%.

The South African economy picked up strongly in the second quarter, growing 4.9% or more than double the 2.1% of the first when the country was hit by serious power shortages.

The top contributors to growth were the manufacturing and mining and quarrying industries, said Statistics South Africa.

The mining industry was hit especially hard in the three months to March as widespread power cuts curbed or halted production.

Africa analyst for Standard Chartered bank, Razia Khan, said the second quarter performance was even higher than the forecasts made on the back of an "exceptionally weak" first three months. "We recognize that the power sector issues in the first quarter weighed on growth and part of the bounce-back in the second quarter reflects a recovery from an exceptionally weak first quarter -- but not all of it," Khan said.

The second quarter figures were "not bad ... given how gloomy everyone has been. "If this growth rate can be sustained, it suggests that the full year performance -- even in the midst of a cyclical slowdown -- should not be that bad at all," he added

Khan noted, however, that higher inflation remained a concern, weighing on demand as the central bank keeps interest rates high in order to tackle rising prices.

For South Africa to achieve growth of 6% or more, it will be necessary to lower the inflation rate, Khan said. The benchmark interest rate was kept at 12% earlier this month, having been increased 10 times since June 2006.

Earlier his month, South African unions launched massive protests against sharp rises in electricity and other prices, especially in food and fuel.

Copyright Agence France-Presse, 2008

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