PRETORIA (Reuters) - South Africa’s economy grew below forecasts in the first quarter of this year as the unemployment rate rose, data showed on Tuesday, dampening expectations of an interest rate hike in coming months.
Growth in Africa’s most advanced economy is expected to be subdued this year due to power shortages, with state utility Eskom unable to cope with demand.
South Africa’s gross domestic product (GDP) grew by an annualised 1.3 percent quarter-on-quarter in the first three months of 2015 versus growth of 4.1 percent in the last quarter of 2014, Statistics South Africa.
Economists polled by Reuters had expected quarter-on-quarter GDP expansion of 1.7 percent.
The economy added 2.1 percent on an unadjusted year-on-year basis in the first quarter, compared with growth of 1.3 percent in the previous three months.
South Africa’s unemployment rate rose to 26.4 percent of the labour force in the first quarter of 2015 from 24.3 percent in the fourth quarter of last year, data showed.
Some analysts said the growth numbers were not supportive of a rate hike for now.
The South African Reserve Bank has kept its benchmark repo rate steady at 5.75 percent since July last year to support the ailing economy but signalled last week inflationary pressures may bring a rate rise in coming months.
One of its deputy governors said on Tuesday there is a “high likelihood” the bank would increase interest rates at its next few meetings.
“The Monetary Policy Committee will probably try to keep rates on hold at the next two to even three meetings, despite the upside risks to inflation and Governor Lesetja Kganyago’s increasingly hawkish rhetoric,” lender Nedbank said in a note.