South Africa’s economy grew by 4,4% in the final quarter of 2010, while growth for the year came in at 2,8%, Statistics South Africa (Stats SA) reported on Tuesday.

This compares with the upwardly revised 2,7 % annualised growth posted in the third quarter and above fourth-quarter market expectations.

The full-year economic growth compared with the 1,7% gross domestic product (GDP) contraction of 2009.

Mike Schussler of Economists.co.za commented that mining and agriculture both showed strong growth, driven by higher commodity prices in the quarter.

“We saw record food prices, as well as coal prices, which boosted growth in the quarter,” Schussler noted.

Manufacturing increased from the strike-induced -4,9% in the previous quarter, to 4,1% in the last three months of 2010.

Stats SA reported that the manufacturing industry’s 0,6 percentage points contribution resulted from strong growth in the motor vehicle, parts and accessories and other transport equipment division, as well as the food, beverages and tobacco division and the basic iron and steel, nonferrous metal products, metal products and machinery division.

The mining and quarrying industry was the largest contributor to the quarter-on-quarter growth, contributing 0,9 percentage points based on a growth of 17,1%, resulting from the increased production of all mining divisions, including coal, gold and other metal ores.

Analysts canvassed by Engineering News Online said that 2011 growth could be marginally better than 2010, at about 3,5%.

Schussler expected first- and second-quarter growth to be quite good, while slower growth was expected in the third quarter, resulting from the increase in water and electricity prices and the implementation of Gauteng’s toll road system.

Rand Merchant Bank chief economist Ettienne le Roux said that he expects GDP growth of between 3,5% and 4% in the first quarter, down from the fourth quarter of 2010.

Nedbank’s economic unit also said that GDP growth was expected to slow in the first quarter of 2011 off the higher fourth-quarter base, but that the economic recovery was forecast to strengthen and broaden in 2011, as a whole.

Le Roux believed that the consumer would drive the economy in 2011, as the labour market stabilised, labour inflation increased and real income grew.

“The demand for credit is also expected to increase, while private fixed investment is hoped to boost the economy in 2011. Business confidence is an important factor, which is expected to pick up with the relatively low interest rate and good balance sheets,” he pointed out.

Absa Capital macrostrategist Jeff Schultz added that, while the 2010 growth of 2,8% was largely in line with expectations, it was still below the South African Reserve Bank’s estimate of what the economy could grow to. However, he was optimistic for 2011’s economic growth.

“We are likely to see further growth in 2011, driven by the demand side of the economy, high nominal wage improvements and supply-side improvements,” he noted.

Meanwhile, Schussler flagged higher oil prices and the knock-on effect of political instability in Africa as potential factors that could negatively influence economic growth this year.

Private investment was expected to increase toward the second half of 2011 and into 2012, boosting economic growth for both years.