Economist says 3% growth ‘not unreasonable’

Following the release of what has been described as disappointing mining and manufacturing output data for March, there has been a temptation to change growth forecasts and blame Europe for our woes. But FNB chief economist Cees Bruggemans believes these reactions are not yet warranted, and he says a 3% GDP growth prognosis for 2012-2013 still doesn’t appear unreasonable. “Mining output was most horrifically off in February, mostly due to labour trouble at one major platinum company and due to safety-linked stoppages elsewhere. “But overall mining output was up in March, perhaps still -10% on a year ago but it was up, suggesting a recovery of sorts from these interruptions,” he said. He points out that in the short term there are infrastructure constraints holding things back, and company and sector-specific issues to be addressed. “This does not guarantee a vigorous rebound in mining output, but there is upside following the severe underperformance of recent months.” When examining the falloff in March manufacturing output, a factor to consider is the -3% in motor vehicle output mainly explained by exports and this pointing to Europe. “But domestic motor sales remained vibrant and on the car side better than expected.” And while he cautions against resting on our laurels, with mainly industry-specific domestic weakness in mining and manufacturing, he says the overall picture may remain sustainable.