Economic growth rate slows to 10 year low
SA’S ECONOMIC growth rate slowed to a decade low in the third quarter, official data showed, as a series of interest rate hikes took their toll on consumer demand.
Statistics SA said third quarter GDP braked to 0,2% on a seasonally adjusted and annualised basis, compared to an upwardly revised 5,1% growth in the second quarter. The third quarter figure was the lowest since the same period in 1998.
On an unadjusted basis, SA’s economy grew by 2,9% compared to the third quarter last year.
Stats SA said the economy was affected by a delayed reaction to a series of interest rate hikes that have knocked household budgets and that the slower growth should be seen in context of the global financial crisis.
“Everything related to households … people can’t cope with the high interest rates,” said Kedibone Mokone, manager for GDP at Stats SA.
The Reserve Bank has raised its repo rate by 5 percentage points in total since June 2006 in a bid to tame inflation, but left it unchanged at 12% on two occasions after the last half percentage point hike in June.
A Reuters poll of economists last week forecast the economy growing by an annualised 0,3% quarter-on-quarter in the third quarter, and by 3,0% year-on-year.
“As we expected, the performance of the third quarter was quite weak, especially after the strong performance of the second quarter,” said Adenaan Hardien, chief economist at Cadiz African Harvest.
“From here on the expectation is that things will slow down even further. As far as interest rates are concerned the last few days have seen a gravitation of views toward a rate cut either in February or as early as December, and these figures would certainly support an earlier cut.”
Stats SA said economic growth for last year was unrevised at 5,1% but growth for 2006 was revised downwards to 5,3% from 5,4%.
The rand last traded firmer at R10,0550 against the dollar, compared to R10,10 before the data was released this morning. The yield on the benchmark 2015 bond was lower at 8,00% from 8,04% before.
In: stories · Tagged with: economic, economic growth
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