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Tuesday, August 19, 2008

South African GDP Accelerates In Q2 2008

South African economic growth rebounded to an annualized 4.9 percent in the second quarter as a power shortage that shut mines in January eased. Gross domestic product climbed from 2.1 percent in the first three months of the year, Pretoria-based Statistics South Africa said in a report today.

Mining and manufacturing output, which together account for about a fifth of the economy, rebounded as electricity supply stabilized. Growth may slow again as six interest rate increases since June last year slash consumer spending on cars and furniture.

Output in the retail, hotel and restaurant industries dropped an annualized 2.2 percent in the second quarter, after gaining 3.6 percent in the previous three months. Growth in the finance and real estate industries slowed to 2.3 percent from 4.9 percent in the first quarter.

The Reserve Bank increased its benchmark interest rate to 12 percent in June, curbing spending and cutting profits at companies such as JD Group Ltd., the country's biggest furniture retailer. Retail sales fell an annual 2.6 percent in June, the fourth consecutive monthly decline.

Mining surged an annualized 15.6 percent in the second quarter, after plunging a revised 25.1 percent in the previous three months. Manufacturing jumped 14.5 percent after dropping 1 percent in the first quarter.

Construction continued to boom, expanding 10.6 percent in the second quarter, as the government stepped up spending on roads and stadiums in preparation for the 2010 FIFA World Cup. Eskom Holdings, the state-owned electricity utility, is spending 343 billion rand ($44.3 billion) over the next five years to expand capacity.

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