The South African economy’s spending growth eased in the second quarter of 2011 due to a contraction in government spending and slowdown in consumer spending, said the Reserve Bank.
In its September Quarterly Bulletin released on Tuesday, the central bank said growth in real gross domestic expenditure decelerated from an annualised rate of 7.9% in the first quarter to 1.3% in the second quarter.
“This deceleration primarily resulted from a contraction in real final consumption expenditure by general government alongside slower, although still firm, growth in real final consumption expenditure by households,” noted the report.
In the first quarter, growth in real final consumption expenditure by households showed an increase of 5.2%. In the second quarter this slowed to 3.8 %.
“The slower pace of increase in spending by households was fairly broad based, with spending being partly constrained by underlying inflationary pressures that affected the disposable income of households.”
According to the bulletin, following an annualised increase of 5.4% in the first quarter growth in the real disposable income of households, it slowed to 4.1% in the second quarter.
Additionally, the nominal level of household debt increased further in the second quarter but at a slower pace, indicating that households were less persuaded to incur additional debt.
“Sustained caution among consumers was reflected in the ratio of household debt to disposable income, which trended further downwards from 76.8 % in the first quarter of 2011 to 75.9 % in the second quarter,” said the Reserve Bank.
Real final consumption expenditure by general government contracted at an annualised rate of 0.1% in the second quarter of 2011, following an increase of 9.5% in the first quarter of 2011.
“The decline in real spending by general government in the second quarter could mainly be explained by the fact that no armaments were acquired by government in terms of the country’s defence procurement programme.”
Growth in real gross fixed capital formation accelerated from an annualised rate of 3.1% in the first quarter of 2011 to 4.1% in the second quarter. – BuaNews
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