South Africa’s economy will probably expand about 3 percent this year, even after a slump in manufacturing output cast doubt on the outlook for growth, South Africa’s Finance Minister Pravin Gordhan said.
Factory production unexpectedly fell 2.7 percent in March from a year earlier, compared with 4 percent growth a month earlier, the statistics agency said yesterday, prompting economists to warn about prospects for 2012.
“These are not happy numbers, but we hope they are temporary,” Gordhan said in an interview today at the World Economic Forum on Africa in Addis Ababa, Ethiopia’s capital. “Let us look at the more long-term trend. It seems to be a more positive one at this point in time.”
The drop in production may limit the recovery of South Africa’s economy from recession in 2009 and ease pressure on the central bank to raise its benchmark rate this year. Europe will probably enter another recession as governments cut spending to help ease a debt crisis that began with Greece more than two years ago. Europe buys about a third of South Africa’s manufactured goods.
Gross domestic product will grow “around 3 percent, which is much better than most parts of the world,” Gordhan said.
Economic growth accelerated to 3.2 percent in the fourth quarter from 1.7 percent three months earlier, according to the statistics agency. Gordhan in February cut the government’s growth forecast for 2012 to 2.7 percent from 3.4 percent.
Factory output should recover and the government plans to announce a 5.4 billion-rand ($670 million) support package to boost manufacturers, Trade and Industry Minister Rob Davies said in separate interview at the World Economic Forum.
“The analysis that people are saying that manufacturing exports are being hit by the euro crisis is probably correct,” he said. “Our trade with most of Europe was flat last year and, in fact, remains below 2008 levels.”
Economists, including Nedbank Group Ltd. (NED)’s Nicky Weimar, said yesterday’s manufacturing data may reduce economic growth in the first quarter. Daniel Mminele, the deputy governor of South Africa’s central bank, said yesterday domestic growth will probably remain subdued.
The rand fell to the lowest in four months against the dollar and 1 percent to 8.0956 by 2:10 p.m. Johannesburg.
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