South African Economy Expanded Less Than Forecast at 1.4% as Exports Slump

By Andres R. Martinez and Gordon Bell - Nov 29, 2011 4:53 PM GMT+0700

Growth in South Africa’s economy, the biggest in Africa, expanded an annualized 1.4 percent in the third quarter, less than economists forecast, as manufacturing and mining output slumped.

Gross domestic product accelerated from 1.3 percent in the second quarter, Statistics South Africa said today in Pretoria. The median estimate in a Bloomberg survey of 20 economists was for the economy to expand 1.8 percent.

“It’s not good news,” Nicky Weimar, an economist at Nedbank Group Ltd., said in a phone interview from Johannesburg today. “Manufacturing was a lot weaker than anybody expected.”

South Africa is struggling to meet employment and economic growth targets as the debt crisis in Europe, which buys about a third of South African manufactured goods, pushes that region close to recession. Finance Minister Pravin Gordhan on Oct. 25 cut his growth forecast for this year to 3.1 percent from 3.4 percent, less than half the 7 percent expansion that the government says is needed to meet its target to create 5 million jobs by 2020.

The rand was at 8.3516 against the dollar as of 11:44 a.m. in Johannesburg from 8.3695 before the data was released. The yield on the R157 government bond, due 2015, slid 2 basis points, or 0.02 percentage points, to 6.98 percent today.

Manufacturing, which accounts for 15 percent of the economy, contracted for a second consecutive quarter, dropping an annualized 1.9 percent in the three months through September. Mining plunged 17.4 percent last quarter compared with a contraction of 4.2 percent in the previous three months, mainly due to strikes in the industry, the statistics office said.

The Reserve Bank has kept the benchmark rate at a 30-year low of 5.5 percent this year to support growth in the face of increasing price pressures. Slower growth and a slump in investors’ risk appetite caused the rand to plunge 21 percent against the dollar this year, the worst-performer of 16 major currencies tracked by Bloomberg.

To contact the reporters on this story: Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net; Gordon Bell in Johannesburg at gbell16@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net