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Economists: 2016 was bad, but there's hope for GDP growth

The GDP estimates released by Statistic South Africa in Pretoria yesterday show that the economy grew by a meagre 0.3% in 2016.

rand-money-cash-currency-economyjpg

PRETORIA – While some economists say the poor 2016 Gross Domestic Product (GDP) figures are the result of government’s failure to implement the very basics to grow the economy, slight growth is expected this year.

The GDP estimates released by Statistic South Africa in Pretoria on Tuesday show that the economy grew by a meagre 0.3% in 2016.

The mining and agriculture sectors of the economy contributed significantly to the negative growth trend for the period.

Economist Iraj Abedian described South Africa’s growth as pedestrian.

“This is way below our potential and even lower than what we need to maintain a standard of living. This is a very disappointing result of years of not paying attention to the fundamentals of growing the economy.”

Argon Asset Management’s Thabi Leoka says the ratings agencies are watching closely.

“The first half of this year is very significant, they’re going to come to South Africa to rate us again in June, so we should see a pick-up in GDP in the second quarter, and hopefully it will be satisfactory.”

Leoka has forecast one percent growth in 2017.

MANUFACTURING CONTRIBUTION

Stats SA’s Michael Manamela said 2016 was marked by two declining quarters which contributed to slow overall growth.

The main contributors to the negative GDP growth rate were the mining & quarrying industry and the manufacturing industry. Mining and quarrying decreased by 11.5% in the fourth quarter. This was largely the result of lower production in coal, gold and 'other' metal ores, including platinum.

Manufacturing decreased by 3.1% largely as a result of lower production in the manufacturing of food and beverages, manufacturing of petroleum, chemical products, rubber and plastic products and manufacturing of motor vehicles, parts and accessories and other transport equipment.

The agriculture, forestry and fishing industry has been in decline for eight consecutive quarters.

The largest positive contributors were the trade, catering and accommodation industry and finance, real estate and business services, which increased by 2.1% and 1.6% respectively, and each contributed 0.3 of a percentage point to GDP growth.

(Edited by Leeto M Khoza)