South Africa: Economy decelerates slightly in Q4

In the fourth quarter, the economy expanded 0.6% over the previous quarter at a seasonally adjusted annualized rate (SAAR). The reading came in slightly below the third quarter’s 0.7% increase and also undershot the 0.8% increase the market had expected. In annual terms, GDP expanded 0.6% in Q4, which came in below the 1.0% expansion recorded in the previous quarter.

Q4’s slight deceleration came on the back of a contraction in manufacturing, which dropped 2.6%. The figure contrasted the 6.2% increase seen in the previous quarter. Moreover, agriculture, forestry and fishing contracted 14.0% in Q4, which was down from the 12.6% decrease seen in Q3. Conversely, an improvement was reported in the construction sector, where growth accelerated from 0.5% in the third quarter to 1.1% in the fourth quarter. In addition, mining and quarrying grew 1.5%, which contrasted the 9.8% drop observed in Q3.

The Central Bank expects the economy to expand 0.9% in 2016 and 1.6% in 2017. FocusEconomics panelists project the economy to grow 1.1% in 2016, which is down 0.2 percentage points from last month’s estimate. For 2017, panelists expect the economy to grow 1.7%.