Gross domestic expenditure rises to 8.3%

Domestic expenditure rises to 8.3%

Pretoria – Real gross domestic expenditure accelerated to 8.3 percent in the first quarter of 2011, says the South African Reserve Bank.

“Growth in real gross domestic expenditure accelerated significantly from an annualised rate of 2.4 percent in the fourth quarter of 2010 to 8.3 per cent in the first quarter of 2011. This acceleration followed a further expansion in all the components of domestic demand,” said the Reserve Bank in the June Quarterly Bulletin.

Growth in final consumption expenditure by households accelerated slightly from an annualised 4.8 percent in the final quarter of 2010 to 5.2 percent in the first quarter of 2011.

This was due to the increased pace spending on durable, semi-durable and non-durable goods, which was partly offset by a moderation in household expenditure on services.

According to the bulletin released on Tuesday, spending on durable goods advanced at an annualised rate of 21.5 percent in the first quarter of 2011.

Meanwhile expenditure on semi-durable goods, that had declined in the third quarter of 2010, increased in the first quarter of 2011 at an annualised rate of 8.6 percent. The strongest growth in this sector was registered in clothing and footwear.

Growth in household spending on non-durable goods accelerated to 3.4 percent in the first quarter of 2011 from a low rate of 0.2 percent in the final quarter of 2010. This increase was primarily due to spending by household fuel and power.

The report highlighted that the nominal level of household debt rose even further in the first quarter of 2011.

“Owing to nominal disposable income increasing at a faster pace than household debt, the ratio of household debt to disposable income continued on its downward trajectory and inched lower to 76.8 percent in the first quarter of 2011 from 77.6 percent recorded in the fourth quarter of 2010,” read the report.

Consistent with a lower interest rate environment, the debt-service ratio of households edged marginally lower from 7.2 percent in the fourth quarter of 2010 to 6.9 percent in the first quarter of 2011 – which is the lowest ratio since the third quarter of 2005.

Growth in real final consumption expenditure by general government accelerated from an annualised rate of 3.9 percent in fourth quarter of 2010 to 9.5 per cent in the first quarter of 2011. The higher rate of spending reflected the acquisition of five military aircraft and an increase in expenditure on other goods and services related to education and health.

Meanwhile, real gross fixed capital formation by private business enterprises accelerated from an annualised rate of increase of 1.6 per cent in the fourth quarter of 2010 to 2.7 percent in the first quarter of 2011.- BuaNews