South Africa Manufacturing Growth Slows

09 August 2012 11:00am - Florence Fullalove

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South Africa Manufacturing Growth Slows

According to Statistics South Africa, South African manufacturing growth slowed more than expected in June as a global economic dip halted demands for exports. What next then for Africa’s biggest economy?

Factory production, which makes up 15% of the economy rose 0.8% from a year easier after reaching 4.4% in May. Output decline 2.4% from a month earlier.

Kevin Lings, an economist at Stanlib Asset Management said, “Production activity appears to have softened in recent months, reflecting the slowdown in the global economy, especially within the euro-area.” He added, “For 2012, we expect manufacturing growth to average less than 1%, which is certainly very disappointing... It really needs a better global environment to pick up and if anything it's getting worse, not better. It also needs a better domestic fixed investment environment to get better and that is going to take some time to improve.””

South Africa’s central bank in July lowered its benchmark lending rate for the first time since 2010, reducing it by half a percentage point to 5% to bolster the economy as Europe’s debt crisis curbs export demand. The government is forecasting economic growth this year of 2.7%, the slowest pace seen since 2009. The Reserve Bank said in its annual economic report, “The manufacturing sector remains susceptible to renewed weakness in the global economy, particularly in the euro area, through possible declines in exports.”


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