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S. Africa's economy slows down amid unemployment spike

Xinhua, May 26, 2015 Adjust font size:

South Africa's economy slowed down in the first quarter of this year due to power constraints which heavily affected the manufacturing and agricultural sector, according to figures released on Tuesday by Statics South Africa (Stats SA).

The country's Gross Domestic Product (GDP) increased year-on- year to 1.3 percent in the first quarter, compared to the 4.1 percent year-on-year growth in the fourth quarter of 2014, Stats SA said.

Most economists had projected that the GDP would decline sharply from 4.1 percent to 1.4 percent quarter-on-quarter.

Wandile Sihlobo, Grain SA economist, told Xinhua that South Africans "need to tighten their belts in the months ahead as the economy is slowing down."

"Nominal GDP was estimated at 965 billion rand (about 81.1 billion U.S. dollars) for the first quarter (Q1) of 2015, which is 14 billion rand (about 1.2 billion dollars) less than the fourth quarter," said Stats SA's Statistician-General Pali Lehohla.

Due to the grave impact of the country's electricity crisis on the GDP, the World Bank expected South Africa's GDP growth to be two percent this year.

The unadjusted real GDP at market price for the first quarter increased by 2.1 percent, said Stats SA.

Manufacturing slumped to 2.4 percent year-on year in the first quarter and agricultural slowed down to 16.6 percents, Stats SA said.

Mining rose 10.2 percent, while financial services expanded 3.8 percent.

Contributing to the GDP were real estate and business services (contributing 0.7 of a percentage point), wholesale, retail and motor trade, and catering and accommodation industry (contributing 0.2 of a percentage point).

The seasonally adjusted real annualized value added by the primary and tertiary sectors rose to 3.3 percent and 1.5 percent respectively, while the secondary sector slowed to 1.4 percent.

Meanwhile, Stats SA said the country's unemployment rate in the Q1 of 2015 was at its highest level since 2003 when it hit 30 percent.

Lehohla said South Africa's unemployment level increased to 26. 4 percent in Q1 of 2015.

"It was stable at about 24 percent since 2003 and this spike is a new phenomenon," he said.

The results of the first quarter shows that the working age population was 35.8 million, which included 15.5 million employed, 5.5 million unemployed and 14.8 million not economically active, said Lehohla.

"Thus resulting in an unemployment rate of 26.4 percent, absorption rate of 43.2 percent and labor force participation rate of 58.6 percent," said Lehohla. Endi