Economists mainly attribute the quarterly economic growth in Q4 to the slowdown in strike action in the third quarter.
In the third quarter, GDP had increased by 0.7% qqsaa.
Azar Jammine, chief economist at Econometrix, says that the GDP results “were better than expected”.
The economic growth last quarter of 3.8% “was due to the rebound from the dismal growth rate of 0.7% recorded in the third quarter on to substantial strike-related work stoppages,” said Annabel Bishop, economist at Investec.
Indeed, main contributors to the increase were a rise in manufacturing production, which rose by 12.3%, and mining and quarrying industry increasesing by 15.7% qqsaa in the last quarter.
Retail sales were also up by 2.3% in the last quarter, from 1.3% in the third quarter.
This is the result of workers returning to work and receiving remuneration in the last quarter, said Bishop. Higher retail sales in the third quarter had been subdued by consumers’ high debt levels and slowed real income growth, Bishop added.
“It is not necessarily an indication of any particular trend for the upcoming year. But it is an indication that people have been overly pessimistic about [economic growth] results,” said Jammine.
Preliminary 1.9% year-on-year (y/y) results for 2013 were not as rosy as the quarterly results. In 2011 and 2013, annual economic growth was recorded at 3.0% and 2.5% respectively.
This is significantly below the potential growth rate, which Investec estimates is 3.5% y/y. The negative output gap is attributed to the effect on low confidence of “the ingrained structural problems of poor education outcomes, labour rigidities and insufficient job creation in the private sector,” said Bishop.