SA fourth quarter 2005 GDP up 3.3%

South Africa's real gross domestic product (GDP) at market prices on a quarter-on-quarter (q/q) seasonally annualised and adjusted (saa) basis rose by 3.3% in the fourth quarter of 2005 from 4.2% in the third quarter, Statistics South Africa (Stats SA) says.

This brought the annual average real growth for 2005 to 4.9% compared with 4.5% in 2004.

The median forecast for the fourth quarter was 4.0% q/q saa with a range of 3.5% to 5.0%.

The median forecast for 2005 was 5.0%, which is the government's forecast given in the February 15 Budget. The forecast range was from 4.8% to 5.2%.

The fourth quarter q/q saa growth rate was the slowest growth quarter in 2005 and followed increases of 4.6% in the first quarter and 5.4% in the second quarter.

The seasonally adjusted real value added at basic prices for all industries - which is equal to GDP minus taxes on products plus subsidies on
products - increased by annualised rates of 4.7%, 5.1%, 4.3% and 3.4% during the first, second, third and fourth quarters of 2005 compared with the fourth quarter of 2004 and the first, second and third quarters of 2005 respectively.

The unadjusted real GDP at market prices increased by 5.5%, 4.9%, 4.9% and 4.5% during the first, second, third and fourth quarters of 2005 compared with the respective quarters in 2004.

The 3.3% q/q saa increase in the fourth quarter was mainly due to increases in the real value added by the wholesale, retail and motor trade,
hotels and restaurants industry (1.2 of a percentage point); the finance, real estate and business services industry (0.7 of a percentage point); transport, storage and communication industry (0.6 of a percentage point) and the construction industry (0.3 of a percentage point).

The main contributors to the 4.9% increase in economic activity in 2005 were the finance, real estate and business services (1.5 of a percentage point), wholesale, retail trade, hotels and restaurants (0.8 of a percentage point), manufacturing (0.7 of a percentage point), transport and communication (0.6 of a percentage point) and construction (0.3 of a percentage point) industries.

Following are economists' reactions to the release of fourth quarter GDP data.

South Africa's real GDP at market prices on a quarter-on-quarter (q/q) seasonally annualised and adjusted (saa) basis rose by 3.3% in the fourth quarter of 2005 from 4.2% in the third quarter, Statistics South Africa (Stats SA) said.

This brought the annual average real growth for 2005 to 4.9% compared with 4.5% in 2004.

The median forecast for the fourth quarter was 4.0% q/q saa with a range of 3.5% to 5.0%. The median forecast for 2005 was 5.0%, which is the government's forecast given in the February 15 Budget. The forecast range was from 4.8% to 5.2%.

JOHAN ROSSOUW, chief economist at Vector Securities:

"The figure is more or less in line with my expectations but below market
consensus. I had expected the quarter to be fairly weak and that seems to have
been the case."

MIKE SCHUSSLER, economist at T-Sec:

"It's a bit of a disappointment - in fact it's a big disappointment. The first quarter of this year isn't going to be much better what with the Transnet strikes and the electricity problems - especially in the Western Cape."

"For bonds the figure will be good. It'll be neutral for the rand but bad for the JSE. The annual average real growth for 2005 figure was as expected. But it is difficult to see how we could pick up momentum this year."

DAWIE ROODT, chief economist at the Efficient Group:

"The number is worse than we expected. It's a bit of a disappointment. For the year, everyone was looking for the magical 5% number and it's unfortunate we couldn't get it. 5% would have been nice."

"From a sentiment point of view, this is probably not going to be so nice for the market."

GEORGE GLYNOS, market analyst at Econometrix Treasury Management:

"The figure is a little softer than what we had anticipated. Not a great number at all. I haven't really had a chance yet to study the breakdown, but I see the mining and manufacturing sectors did not perform particularly well, which is clearly an indication of the strength of the rand. A disappointing figure."

Article from: www.sundaytimes.co.za