South Africa’s gross domestic product (GDP) fell by 1,4% year-on-year in the fourth quarter of 2009, while GDP growth for the year was down 1,8% on that of 2008, Statistics South Africa (Stats SA) reported on Tuesday.

However, the country's GDP expanded by 3,2% in the final three months of the year, when compared with the third quarter.

The largest contributors to the quarter-on-quarter GDP growth had been the manufacturing industry, which contributed 1,5 percentage points and the general government sector, which contributed one percentage point.

The mining and quarrying sector; the transport, storage and communication industry; the finance, real estate and business services; and the personal services industry, each contributed 0,2 percentage points to the overall growth.

The manufacturing sector, in particular, showed that growth was mainly driven by expanding global demand and not domestic demand, while growth in the construction sector was driven by capital formation, Stats SA DDG for economic statistics Dr Rashad Cassim said in a briefing on Tuesday.

Wholesale and retail data show that growth was not being driven by domestic demand or consumption, he said, adding that domestic demand levels were still not at levels where many would expect it to be.

Investec economist Annabel Bishop said that, despite this pick-up in economic growth, the country was unlikely to see a sharp V-shaped recovery, owing to South Africa’s heavy dependence on global demand and the high degree of job losses and company failures seen in 2009.

She warned that the recent strength of the rand could curb demand for South African exports.

Nevertheless, she expected the latest GDP data to be an important factor in boosting business and consumer confidence, which was important for underpinning the economic recovery.

The South African Chamber of Commerce and Industry, meanwhile, welcomed the announcement of the improved GDP figures, saying this “strongly adds to the momentum of the fragile improvement in the third quarter of 2009”.

The chamber added that the manufacturing industry’s performance and contribution to the GDP growth reinforced the Department of Trade and Industry’s focus on manufacturing in its Industrial Policy Framework Action Plan 2, which was recently released for comment.

However, trade union Solidarity warned that the revival in the manufacturing sector would not lead to an immediate drastic increase in job creation, saying that it would possibly take several months before job creation in this and other sectors recovered.

“The improvement recorded in the manufacturing sector in the fourth quarter of 2009 holds positive prospects for job creation in the sector. However, patience is now needed because job creation traditionally only follows after growth. Nevertheless, from a labour perspective the fact remains that there is hope for improvement here,” said Solidarity spokesperson Jaco Kleynhans.

The union further warned that not everything in the latest GDP figures were "rosy", saying that the growth in the government sector's contribution to GDP was not sustainable. "This growth isn’t sustainable and it should be taken into account that this sector’s growth depends on taxpayers,” said Kleynhans.

He added that the decline in growth in the construction sector was "becoming a cause for concern", noting that sustained development and construction projects were now needed to ensure that this sector did not continue to lose growth momentum.

Meanwhile, Investec said that it expected South Africa’s GDP growth in the first quarter of 2010 to be 3,3%, a similar level to that of the fourth quarter of 2009.

Further, it expected the country’s GDP to grow at 3,9% in the second quarter of the year, and at 4,6% in the third quarter of the year.

Finance Minister Pravin Gordhan noted in his budget speech last week that the National Treasury expected South Africa's GDP to grow by 2,3% in 2010, before rising to 3,6% by 2010.

Meanwhile, Stats SA said that the nominal value added to the economy during the fourth quarter was R624-billion, an increase of R3,5-billion on that of the third quarter.

The nominal value added to the economy during 2009 was R2,4-trillion, an increase of R139,5-billion on that of 2008.