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Economic growth at 2.1% low

by Bathandwa Mbola
on 27 May 2008
BuaNews Online
BuaNews Online

South Africa has started the year on a slow growth with the first quarter Gross Domestic Product (GDP) registering an increase of only 2.1 percent.

This is the lowest growth since the third quarter of 2001, when the seasonally adjusted real GDP was 1.1 percent.

Figures released by Statistics South Africa (Stats SA) on Tuesday showed that the increase is the lowest compared to the first, second, third and fourth quarters for 2007 that were reported at 5.1 percent, 4.4 percent, 4.8 percent and 5.3 percent respectively.

"The main contributors to the increase in economic activity for the first quarter of 2008 were the finance, real estate and business services industry (1.0 of a percentage point); general government sector (0.6 of a percentage point); wholesale, retail trade, hotels and restaurants industry and the construction industry; (each contributing 0.5 of a percentage point), transport and communications (0.3 of a percentage point) and agriculture, forestry and fishing (0.3)," said Stats SA.

The seasonally adjusted real annualised value added by the non-agricultural industries (excluding the impact of the volatile agriculture industry) increased by 1.7 percent from 5.4 percent, the report added.

The country's electricity shortage can be attributed to the sharp decrease in the GDP.

Since the start of load shedding in January it has impacted negatively on the mining and manufacturing sectors- GDP's major influences.

Eskom, which supplies 95 percent of the country's power, has cut electricity supplies after the government delayed its plan to expand. The power shortage will probably last for seven years, according to the utility, while it spends R343 billion ($44.3 billion) to build new power plants.

At the same time, consumer spending on big ticket items waned following four interest rate increases last year.

The GDP measures the national income and output for a given country's economy.

It is defined as the total market value of all final goods and services produced within the country in a given period of time.

It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time, and it is given a money value. - BuaNews

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