GDP slows to 2.6%

South Africa's real Gross Domestic Product (GDP) slowed to 2.6 percent quarter-on-quarter in the three months to the end of September 2010, falling below market expectation, said Statistics South Africa (Stats SA).

The figure is the lowest to date for this year. GDP for the second quarter was revised down to 2.8 percent from 3.2 percent.

Stats SA's Deputy Director General, Dr Rashad Cassim, says the numbers showed the economy is far from reaching the 7 percent growth needed by the country to turn the tide on job creation and poverty. He fingered the manufacturing sector as one of the main culprits responsible for the weak growth. "I suspect that part of the problem is the exchange rate."

Manufacturing, according to Stats SA, showed negative growth of 5 percent, partly due to lower production in the motor vehicle, parts and accessories sector as a result of the recent strike. The mining and quarrying, wholesale, retail, motor trade and accommodation industries were the major contributors to the 2.6 percent figure.

General government services in the third quarter slowed to 0.4 percent from a seasonally adjusted figure of 4.6 percent in the second quarter.

"The important point is that the low number has little to do with government cutting jobs," said Cassim, adding that this had to do with the impact of the strike action.

Kedibone Mabaso, GDP manager at Stats SA, said the remaining 11 days of the FIFA World Cup that fell into the third quarter did not translate into growth.

Market expectation was that GDP would increase above 3 percent. - BuaNews