S.Africa Q3 growth slows as strikes hit factory output - CNBC Africa

S.Africa Q3 growth slows as strikes hit factory output

Southern Africa

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Africa's biggest economy grew 0.7 percent quarter-on-quarter in the third quarter. PHOTO: Getty Images

Official data showed on Tuesday that the country's growth dragged lower by a contraction in manufacturing after weeks of strikes in the automotive sector.

However, the data is unlikely to alter already pessimistic official growth predictions for 2013. The Reserve Bank last week cut its forecast to 1.9 per cent from the 2.0 percent seen in September, while the Treasury now sees 2.1 per cent expansion from 2.7 per cent in February.

Africa's biggest economy grew 0.7 percent quarter-on-quarter in the third quarter, after rising by a revised 3.2 per cent in the previous three months, Statistics South Africa said.

Manufacturing, which contributes 15 percent to South African output, fell by 6.6 per cent over the previous quarter, although this was offset by an 11.4 per cent rebound in mining as the sector recovered from its own labour disturbances.

On an unadjusted year-on-year basis, the economy grew 1.8 per cent in the third quarter from a revised 2.3 percent in the previous three months.

Economists polled by Reuters expected quarter-on-quarter growth of 1.2 per cent, while the year-on-year rate was seen at 2.1 perc ent.

"The third quarter GDP data shows growth is weak on significant strike-related work stoppages, falling confidence levels, slowing consumer spending due to high indebtedness and moderating growth in real disposable incomes," said Investec economist Annabel Bishop.

"The failure of South Africa to run at its potential economic growth rate, and so full employment, is an ingrained structural problem of poor education outcomes, labour rigidities and insufficient job creation," she added.

Critics say stringent labour regulations tilted in favour of workers are a deterrent to employment, undermining efforts to slash a jobless rate of about 25 per cent of the workforce.

The rand largely shrugged off the data, partly helped by a globally weaker dollar, while government bond yields were slightly lower.

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