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South African economic growth revised down

Xinhua, May 24, 2016 Adjust font size:

The South African economy grew slower than expected in the fourth quarter of 2015, according to new data released on Monday by Statistics SA (Stats SA).

The country's seasonally adjusted and annualized GDP grew 0.4 percent in the fourth quarter of 2015, down from the previously predicted 0.6 percent, the data showed.

Slow economic growth has led to low business confidence, lack of expansion and poor job creation, Stats SA said.

South Africa had 725 billion rand (about 46 billion U.S. dollars) worth of gross domestic product and created 1.4 million job opportunities in 2015 amid a global slow down and financial crisis as well as erratic power supply, according to Stats SA.

Responding to the data, Isaac Matshego, Nedbank senior economist, sounded an alarm bell, predicting that South Africa's economy will tumble by 0.3 percent in 2016, in the event that there is no downgrade of the country's sovereign rating.

He told Xinhua that the economy will grow 0.6 percent in 2016.

"I have the hope that Standard & Poor's (S&P) will not downgrade (the country's rating). If that happens, the country will go into recession," Matshego said.

The GDP drop in the second quarter of 2015 was also lower than previoulsy expected. GDP decreased to two percent in the second quarter of 2015, revised from a 1.3 percent slump.

Economic growth in the first quarter of 2015 was revised upwards to 1.9 percent from 1.4 percent, while that for the third quarter was lowered to 0.3 percent from 0.7 percent, according to Stats SA.

Despite these revisions, the economic growth rate for last year remained unchanged at 1.3 percent.

South Africa's ailing economy was expected to take a dive as the country was battling its worst power outages in seven years because of surging demand for electricity.

Another economist, Wandile Sihlobo of the agricultural chamber Agibiz, said the weaker rand and unstable political situation have led to the slowdown of the economy.

"There remain risks in the domestic market. Given the negative political influence, the economy is expected to weaken," Sihlobo said. Endit