Third quarter not off to good start

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Pretoria - Economic activity in the third quarter, based on the latest short-term indicators, was not off to a good start, said the Reserve Bank.

The Reserve Bank's Dr Monde Mnyande, chief economist and advisor to the governor, said many aspects of economic activity internationally and domestically in the second quarter were disappointing in the least. 

This as real growth on the global front slowed and confidence deteriorated due to the fiscal crisis in the Eurozone and uncertainty of the federal debt ceiling in the US.

Domestically, the real value added in the agricultural, mining and manufacturing sectors contracted in the second quarter.

"This loss of economic growth momentum was especially regrettable in light of the high and rising rate of unemployment in the country.

"On a net basis, very few jobs were created during the quarter, and the unemployment rate had increased further. The latest short-term indicators for these sectors seem to suggest that the third quarter of the year was not off to a good start," said Mnyande.

His comments come as the central bank released the September Quarterly Bulletin on Tuesday.

According to the report, real gross capital formation rose from 3.1% in the first quarter to 4.1% in the second quarter due to increased spending by the private sector, government and public corporations.

On the positive side, while growth in consumption expenditure decelerated, growth in real fixed capital formation accelerated further in the second quarter.

"Provincial and local governments stepped up expenditure on housing and construction works, and public corporations continued to invest more in productive sectors of the economy, namely electricity and transport. 

"While the stronger pace of capital formation bodes very well for the future, it must be remembered that it comes off a low base, and should therefore not leave anyone with a sense of complacency. A more aggressive approach to productive investment spend, both in the public and private arena, is a must if the economy has to achieve its job-creating target and sustain it," he explained. - BuaNews

 


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