Standard Bank Research Team
Standard Bank
Better growth in Q3:14 assisted by base effects and revisions
Real GDP growth for Q3:14 grew at 1.4% y/y and 1.4% q/q (saar), up from revised rates of 1.3% y/y and 0.5% q/q in Q2:14. This was in line with consensus of 1.4% y/y, and 1.5% q/q (saar), and above our forecast of 1.2% y/y and 0.8% q/q (saar).
Average growth for the first three quarters of 2014 is 1.5% y/y.Revised GDP data showed that the pick up in QoQ growth was generated by the private sector, which benefited from post strike base effects but was also relatively broad based; trade and hospitality grew 3.4%q/q (saar) and contributed 50bps more to growth in Q3 than it did in Q2; mining grew 1.6% q/q, and contributed 35bps more in Q3, and the financial sector grew 2.4% q/q contributing 24bps more in Q3 (fig 7).
QoQ growth in Q3:14 was weaker in the public sectors i.e. government and transport which both grew 2.2% q/q down from 3.9% q/q in Q2:14; utilities, which contracted further from -0.5% q/q in Q2:14 to -1.1% q/q and personal services which slowed from 1.5% q/q to 1.3% q/q.
Slower YoY growth was recorded in mining, which contracted 2.9% y/y as the effect of strikes in July and August could not compensate for the recovery in September; government, which slowed from 3.4% to 3.2% y/y; utilities, which contracted further from -1.3% y/y to -1.8% y/y; transport, which fell from 2.4% y/y to 2.2% y/y; and construction, which decelerated marginally from 2.8% to 2.7% y/y. Slower growth in these sectors was compensated for by stronger growth in trade (1.5% y/y), manufacturing (-0.8% y/y), agriculture (8.9% y/y) and finance (2.2% y/y). As with mining, the recovery in manufacturing in September could not compensate for strike related poor performance in July and August, however the contraction in was less severe than in Q2 (-1.5% y/y).
Statistics SA has re-benchmarked and rebased GDP data for the period 2004 to Q2:2014. Average growth from 2004 - 2013 is 3.3% y/y versus 3.4%y/y prior to the revisions.The SARB will release its revised estimates of GDP, from an expenditure perspective, on 8 December 2014. The revisions include:
Changing the base year for estimates at constant prices, from 2005 to 2010.
The implementation of the 2008 SNA (System of National Accounts). This has resulted in the inclusion of research and development and weapons systems under gross fixed capital formation instead of intermediate consumption; a refined method of calculating financial services; and the inclusion of stock options in employee compensation.
New sources of information including industry large sample surveys, the 2010/11 Income and Expenditure Survey, the 2011 Population Census; and more detailed producer and consumer prices.
Figure 5 indicates the outperformance of government, finance and trade, and the underperformance of mining, utilities, construction and manufacturing since 2010.
The revised deflator (fig 6) implies that inflation was higher in 2011, 2012 and 2013 than previously estimated.
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