South Africa’s spending growth contracted 3.6% in the fourth quarter of 2013, the Reserve Bank said today.
“Aggregate real gross domestic expenditure declined further from an annualised rate of 0.8% in the third quarter of 2013, to 3.6% in the fourth quarter,” said the central bank in its Quarterly Bulletin.
Rising inflation and tighter lending conditions, among others, were given as reasons for the slower pace of real final consumption expenditure by households in the fourth quarter of 2013.
“Having increased at an annualised rate of 2.1% in the third quarter of 2013, real spending by households advanced at a marginally slower pace of 2% in the fourth quarter. Growth in outlays on durable and semi-durable goods lost some momentum, whereas real expenditure on non-durable goods remained sluggish. Expenditure on services, however, increased at a faster pace over the period,” noted the bank.
According to the bulletin, the ratio of household debt to disposable income fell to 74.3% from 75% in the third quarter.
Real final consumption expenditure by general government rose by 2.4% in 2013 – slower than the increase of 4% in 2012 when spending on armaments bolstered these outlays. The moderation in 2013 could also in part be attributed to slower growth in spending on compensation of employees.
“Growth in domestic demand is likely to remain lacklustre this year as household financial conditions are under pressure, and general government remains committed to reduce the fiscal deficit and the wage bill over the medium term.
“Firms will still be wary of expanding capacity aggressively in the current weak economic environment, while high input costs, persistent labour related disputes in some of the key industries as well as general infrastructure constraints will also hurt sentiment,” said Nedbank economists. – SAnews.gov.za
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