GDP expected to come in lower than 2% in the third quarter
Governor Gill Marcus
Pretoria – The Gross Domestic Product for the third quarter is expected to come in lower than the growth seen in the second quarter, largely due to recent industrial action in the mining sector. “We expect GDP to have expanded by 1.4% quarter-on-quarter from the 3.2% quarter-on-quarter in the second quarter owing to a steep contraction in mining production,” said Absa Capital in its economic commentary on Monday.
Statistics South Africa will release the third quarter’s figures on Tuesday. Analysts are expecting growth of between 1.4% to 1.7% – largely due to a series of wildcat strikes that kicked off in the mining sector in August.
Standard Bank economists expect GDP growth of 1.7% citing a reversal in mining and quarrying as the main reason.
In the second quarter, the contributors in economic activity were mining and quarrying contributing 1.5% as well as finance among others.
The bank expects the primary sector to have declined significantly in the third quarter despite a steep increase of 23% in the second quarter. The agriculture, forestry and fishing sector is likely to register a decline following on the 5.8% increase in quarter two.
However, the secondary sector which comprises of the manufacturing, construction and the electricity, gas and water industries is expected to improve slightly. The secondary sector accounts for roughly 20% of GDP. In the second quarter the electricity, gas and water industry at -0.2% as well as the manufacturing industry contributed negatively to GDP. Manufacturing showed negative growth of 1%.
In the Medium Term Budget Policy Statement presented by Finance Minister Pravin Gordhan before Parliament in October estimates were that about R10.1 billion worth of production has been lost to platinum and gold mining strikes and stoppages since the start the year.
At the last Monetary Policy Committee Meeting (MPC) for the year, Governor Gill Marcus said that the central bank had revised downwards GDP growth for 2012 to 2.5% down from 2.6% due mostly to the continued global slowdown and domestic events including labour unrest.
Marcus also expressed concern at the recent wage settlements. “The MPC is concerned about the recent trend in wage settlements and the potential negative impact on the economy, particularly on growth and investment,” she said last week.