“This improvement in growth in the second quarter of 2008 reflected strong increases in real value added by the primary and secondary sectors.
“The expansion was concentrated in mining and manufacturing, and could partly be attributed to base effects as electricity supply improved considerably in the second quarter, following severe disruptions, which weighed on production in the preceding quarter,” said the South African Reserve Bank (SARB), Thursday.
The central bank in its quarterly bulletin report highlighted that the price of Brent crude oil which reached record highs of $146 per barrel in early July 2008, has stabilised and is currently sitting at the $105.64 per barrel.
High oil and food prices placed intensified pressure on many emerging-market economies which in most cases resulted in a tightening of monetary policy with the hiking of interest rates.
“However, in a few instances, concerns about decelerating economic growth and continued dislocations in the credit markets prompted central banks to reduce policy interest rates.
“Net oil exporter countries have been experiencing more favourable growth than the oil importers. As elsewhere in the world, food price inflation worsened considerably in most parts of Africa during the past year,” said the Bank.
On the African continent real growth is expected to exceed 5% for the seventh consecutive year in 2008
Commodity export volumes benefited considerably from the recovery in mining and manufacturing production in the second quarter of 2008.
Coupled with this was an increase in global commodity prices which were very favourable for South African producers.
“Consequently, the trade deficit narrowed significantly in the second quarter.
“...[T]hese developments brought about a significantly smaller deficit on the current account of the balance of payments in the second quarter of 2008,” said the Bank.
Inflationary pressures in the first half of 2008 led the Bank's Monetary Policy Committee (MPC) to raise the repo rate in both April and June 2008 by 50 basis points on each occasion.
“With the economy seeming to be responding to the tighter monetary policies, and given the signs of moderation in some of the largely exogenous drivers of inflation such as the prices of crude oil and agricultural foodstuffs, the Bank did not raise interest rates further at the August 2008,” to the relief of many cash-strapped South Africans.
Adding to the much needed financial relief the price of all grades of petrol fell with between 69c and 78c on Wednesday dropping the price for a litre of 93 unleaded petrol below the R10 level.
Article published courtesy of BuaNews
