Economy!! 12/12/200310:17Ampage160
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07/Economy!! 12/12/200310:17amPage160 Guy Stubbs/Touchlife Images 07/Economy!! 12/12/2003 10:17 am Page 161 chapter 7 Economy After the steady decline in annual Gross and a positive domestic economic outlook, Domestic Product (GDP) growth during the helps the latter. Among emerging markets, apartheid years, the country has begun to South Africa increasingly stands out as a experience economic growth since 1994. success story. Significant economic achievements have Supporting this is one of the lesser-known been recorded since 1994, including macro- achievements of the South African economy economic stabilisation, a profound restruc- – a dramatic rise in productivity levels since turing of the real economy, and substantial 1994, after two decades of stagnant or export success. declining productivity preceding the first The critical challenge of strengthening the democratic election. This extends to fixed- link between economic growth and export capital productivity, while labour productivity success with employment creation, poverty and unit labour costs are converging. This is alleviation, and a marked reduction in further reinforced by the almost complete inequalities, remains. disappearance of illegal strikes and plant South Africa will have growth rates rising to stoppages. a projected 4% by 2005, with Consumer Price In 2002, manufacturing grew by 5,4%, Inflation excluding mortgage rates (CPIX) which was the fastest growth rate since falling to around 5% per annum by 2005. 1995. The decline in employment in manu- Furthermore, for the first time in more facturing has eased and there are encourag- than a decade, GDP is benefiting from ing signs of possible employment growth positive input from all components — gross in this sector. Although the weak global fixed investment, household consumption conditions, compounded by the crisis in the expenditure and government expenditure. Middle East, were expected to lead to softer The easing of Balance of Payments con- conditions in manufacturing in 2003, this straints, supported by a strong trade balance should be viewed against the impressive growth rate in 2002. A lowering inflation rate, cuts in interest rates, and reductions in The South African Women Entrepreneurs personal income tax, will support significant Network was established to assist aspiring increases in domestic consumer expendi- and existing women entrepreneurs in the small business sector to find solutions to the wide ture, thus increasing domestic demand. range of gender-related obstacles that have Forecasts by the Bureau for Economic an adverse impact on their businesses. The Network addresses these constraints Research, based on surveys of manufactur- by advocating appropriate policy changes, ing enterprises, predict continued strong building capacity and facilitating the access of women to business resources and growth in manufacturing output over the information. next four years. In terms of manufacturing 161 07/Economy!! 12/12/2003 10:17 am Page 162 South Africa Yearbook 2003/04 Real Gross Domestic Product Percentage change at seasonally adjusted and annualised rates Sector 2001 2002 1st qr 2nd qr 3rd qr 4th qr Year 1st qr 2nd qr 3rd qr 4th qr Year Primary sectors -3,8 -0,8 -2,0 -2,2 -1,6 3,6 4,7 2,7 0,1 1,4 Agriculture -6,8 -2,2 -0,8 0,5 -1,7 7,6 8,8 4,9 0,3 4,0 Mining -1,4 0,2 -2,9 -4,3 -1,5 0,6 1,6 1,1 -0,1 -0,6 Secondary sectors 2,1 2,2 0,1 5,4 3,5 3,3 5,0 3,0 2,2 3,4 Manufacturing 1,7 1,9 -0,1 6,9 3,6 3,8 5,8 3,6 1,6 4,0 Tertiary sectors 3,8 3,4 3,3 3,3 3,4 2,7 3,4 2,9 2,8 3,1 Non-agricultural sectors 3,0 2,9 2,1 3,4 3,1 2,7 3,7 2,8 2,5 3,0 Total 2,3 2,6 1,8 3,2 2,8 3,0 3,8 2,9 2,4 3,0 Source: South African Reserve Bank Quarterly Bulletin, March 2003 output, the sector is expected to be 40% big- sector expanded by 3,7%, driven by solid ger in 2007 than it was in 1995. growth in the platinum-group metal and Ranked against other economies, South agricultural sectors. Buoyed by investment in Africa’s global competitiveness has consistent- the manufacturing sector, and the strong ly improved over the last few years, whether growth in construction spending, the second- measured in terms of business efficiency, ary sector expanded steadily in the first three government efficiency, infrastructure or eco- quarters of 2002, helping to create new nomic performance. Mirroring this is a steady employment opportunities. rise in manufacturing production, while the quality of that production, measured in terms Domestic output of defects per unit, is steadily rising. Manufacturing for export has replaced com- The South African economy grew by 3% in modities as the centrepiece of the South 2002 as a whole, a growth rate that was African economy, far exceeding mining in marginally higher than the 2,8% attained in importance. A prime example of this is the 2001. Even though the economy lost some automotive industry which, since 1996, has growth momentum in the second half of 2002, taken off to remarkable heights, growing economic growth still outpaced the rate of tenfold by 2002, in terms of vehicles and expansion in many parts of the world. components. At the end of August 2002, After South Africa’s real GDP increased at annual growth in manufacturing exports was quarter-to-quarter seasonally adjusted and 8,7%, according to the Bureau for Economic annualised growth rates of 3,0%, 3,8% and Research. 2,9% in the first three quarters of 2002, the Investment grew by 6,3% and is expected economy grew at a rate of 2,4% in the last to continue to grow around 6% a year from quarter of 2002. This slowdown in growth can 2003 to 2006. According to the Bureau for be attributed mainly to slower growth in the Economic Research, the net majority of real value added by the secondary sectors of firms reported an increase in total fixed invest- the economy. ment, from 11% to 29%. These investment Growth in real value added by the primary plans will drive the growth in manufacturing sectors improved from a decline of 1,6% in output over the next four years. The primary 2001 to 1,4% in 2002. This was due to the 162 07/Economy!! 12/12/2003 10:17 am Page 163 Economy Real gross domestic expenditure Percentage change at seasonally adjusted and annualised rates Components 2001 2002 1st qr 2nd qr 3rd qr 4th qr Year 1st qr 2nd qr 3rd qr 4th qr Year Final consumption expenditure by households 3,3 2,5 2,8 3,5 3,1 3,4 3,5 2,9 2,3 3,1 Final consumption expenditure by 3,5 3,6 3,7 3,8 3,3 3,5 3,5 3,7 4,2 3,7 general government Gross fixed capital formation 3,9 3,1 2,2 5,5 3,2 6,9 7,8 8,7 11,5 6,5 Domestic final demand 3,5 2,8 2,8 3,9 3,2 4,0 4,2 4,0 4,2 3,8 Change in inventories (R billion) 0,4 -2,3 4,0 4,7 1,7 6,4 0,4 4,5 6,2 4,4 Gross domestic expenditure 3,1 1,7 5,9 4,9 2,3 5,4 -0,6 7,4 5,0 4,2 Source: South African Reserve Bank Quarterly Bulletin, March 2003 agricultural sector improving from a decline of Domestic expenditure 1,7% in 2001 to 4% in 2002. Increased field- crop production contributed generously to this Growth in real expenditure for 2002 as a whole performance. The mining sector declined by amounted to 4,2%, compared with growth of 0,6%. Subdued global demand for metals and 2,3% in 2001. Heightened investment activity minerals and the dampening effect of the contributed substantially to the acceleration of stronger Rand on export earnings towards the expenditure growth in 2002. In contrast with last part of 2002 might also have constrained GDP, the growth in gross domestic expenditure mining production somewhat. was stronger during the second half of 2002. Despite the slowdown in manufacturing Final domestic demand also accelerated output in the second half of 2002, this sector growth in 2002, from 3,2% in 2001 to 3,8% in was the major contributor to growth in the 2002. secondary sectors in 2001 and 2002. Quarter- The growth in real final consumption expen- to-quarter growth rates ranging between 1,6% diture by households remained at 3,1% for and 5,8% lifted the growth in real manufactur- both 2001 and 2002. ing value added, for 2002 as a whole, to 4%, a Similarly, the quarter-to-quarter growth slight acceleration from the 3,6% growth in recorded in this aggregate during 2002 2001. This was due to the improved price resembled that of 2001. The quarterly growth competitiveness which South African produc- rates in real final consumption expenditure by ers enjoyed in export markets, as a result of households slowed down somewhat during the lower exchange value of the Rand for the the second half of 2002. greater part of 2002. Despite this development, final consump- The year-on-year growth in the real value tion expenditure by households as a ratio to added by the tertiary sectors slowed down gross domestic expenditure increased slightly from 3,4% in 2001 to 3,1% in 2002.