SA Economic Growth Slows in Q4 2018

South AfricaSkyscrapers stand on the city skyline looking west from the Carlton Center in Johannesburg, South Africa
  • SA Economic Growth Slows in Q4 2018

Growth in Africa’s second largest economy South Africa slowed in the fourth quarter of 2018 as fixed investment dipped.

The gross domestic growth slowed to 1.4 per cent annualized rate from the revised 2.6 per cent recorded in the third quarter, Statistics South Africa said on Tuesday in the capital, Pretoria.

On a yearly basis, the economy expanded at 0.8 per cent in 2018 when compared with a revised 1.4 per cent from 2017. Better than 0.7 per cent projected by most economists.

The output from the mining sector decreased by 3.8 per cent in the fourth quarter and contributed -0.3 per cent to economic growth.

Real estate, finance and business services expanded by 2.7 per cent in the quarter. Improved economic activity was recorded for financial intermediation, insurance, auxiliary activities and real estate.

Household spending grew by 3.2 per cent in the quarter, while fixed capital formation fell 2.5 per cent.

The most industrialized economy in Africa has not expanded by more than 2 per cent a year in six years despite political changes in late 2017 and early 2018. South Africa has been struggling with growth outside consumption.

Mark Bohlund, an Economist at Bloomberg, said “the headline figure was better than expected, but the heavy dependence on private consumption carries risks for the longevity of the current expansion.

“We expect the sharp drop in fuel prices in January and December to give further impetus to consumption in the first half of 2019, but risks to the rand and power supply is likely to continue to inhibit investment.

“The risks to our 1.4 per cent growth forecast for this year are increasingly tilted towards the downside.”

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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