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South African Growth Slows Suddenly

May 28, 2013
Maintenance shutdowns in notably petroleum and other industries contributed to a 7.9% slump in manufacturing and overall negative 1.2% quarterly growth in manufacturing.

JOHANNESBURG -- The South African economy unexpectedly slowed down in the first quarter to show growth of 0.9%, a five-year low, official data showed on Tuesday.

Growth of gross domestic product (GDP) fell from 2.1% at the end of last year, with a 1.2% fall of output by manufacturing industry, data from Statistics South Africa showed.

The quarterly growth was the worst since a 1.7% contraction in 2009.

The South African economy, the biggest in Africa, grew by 2.5% in 2012.

Analysts, shocked at lower-than-expected figures, revised projected annual growth downwards. "We were looking at 1.9%," said Nicky Weimar, Nedbank senior economist. "Obviously we are extremely disappointed."

Nedbank expects 2.2%-growth this year, down from its earlier 2.6% estimate.

The national currency the rand -- already at its lowest point in four years -- fell to 9.73 to the dollar following the release of the latest growth figures -- compared to 9.59 at the close of trading on Monday.

Maintenance shutdowns in notably petroleum and other industries contributed to a 7.9% slump in manufacturing and overall negative 1.2% quarterly growth in manufacturing, said Stats SA's Gerhardt Bouwer. "There were a few weeks they stopped for maintenance," he said.

Output by the sector of agriculture also contracted slightly, "but the pace of activity in most other sectors slowed noticeably over the quarter," Nedbank said in an analysis.

A 14.6% surge in mining output did little to help growth.

The figures raise concern amid the economy's tepid outlook and over 25% unemployment.

Last week the central bank kept the main interest at 5%. The rate-setting committee was "increasingly concerned" over the economy's "deteriorating outlook", South African Reserve Bank governor Gill Marcus said announcing the rate.

Inflation hovers at 5.9% just shy of the bank's six percent-threshold, but is predicted to break through the target by the third quarter this year.

The weakness of the rand is also putting pressure in prices, making imports more expensive.

Copyright Agence France-Presse, 2013

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