Consumers are spending less, with household spending on clothing, transport and other things going down.
South Africa’s economy shrank by 0.1% in the first quarter of this year, according to data released on Tuesday by Stats SA. This decline follows a near-recession in the fourth quarter of last year and falls short of economists’ forecasts for modest growth.
The decline in the country’s GDP was driven by a slowdown in manufacturing, mining and construction. The good news is that agriculture showed some growth.
Consumers are also spending less, with household spending on clothing, transport and other things going down. Businesses are also investing less in things like equipment and buildings.
READ: Investors brace as South Africa heads for new coalition era
According to Stats SA, the manufacturing industry decreased by 1.4% in the first quarter of this year, contributing -0.2 of a percentage point to the negative GDP growth.
“Five of the 10 manufacturing divisions reported negative growth rates in the first quarter. The motor vehicles, parts and accessories and other transport equipment division and the basic iron and steel, non-ferrous metal products, metal products and machinery division made the largest negative contributions to the decrease in the first quarter,” Stats SA noted.
Mining and quarrying industry
The mining and quarrying industry decreased by 2.3% in the first quarter, contributing -0,1 of a percentage point. Decreased economic activities were reported for platinum group metals, coal, gold and manganese ore.
The construction industry, according to Stats SA, decreased by 3.1% in the first quarter, contributing -0.1 of a percentage point. Decreases were reported for residential buildings and construction works.
READ: Africa can ill afford R1.4 trillion in debt payments
On a positive note, the agriculture, forestry and fishing industry increased by 13.5% in the first quarter, contributing 0.3 of a percentage point.
“This was primarily due to increased economic activities reported for horticulture products,” Stats SA said.
Expenditure on GDP
Stats SA said expenditure on real GDP decreased by 0.2% in the first quarter of this year. Last month, South Africa’s unemployment rate hit a new high of 32.9% in the first quarter of this year.
“Expenditure on real gross domestic product decreased by 0.2% in the first quarter of this year, following an increase of 0.3% in the fourth quarter of last year.”
READ: SA’s unemployment rate surges to 32.9% in first quarter of 2024
Household final consumption expenditure (HFCE) decreased by 0.3% in the first quarter, contributing -0.2 of a percentage point to the total negative growth. Decreases were reported for durable goods, semi-durable goods and services.
Stats SA stated:
The main negative contributors to the decrease in HFCE were expenditures on clothing and footwear (-7.0 and contributing -0.4 of a percentage point), transport (-1.3% and contributing -0.2 of a percentage point) and the ‘other’ category (-1.3% and contributing -0.2 of a percentage point).
Exports and imports
There is a silver lining though. Exports are doing better than imports, which is a positive sign for the economy. Net exports contributed positively to expenditure on GDP in the first quarter. Exports of goods and services decreased by 2.3%, largely influenced by decreased trade in pearls, precious and semi-precious stones and precious metals; vehicles and transport equipment excluding aircraft; chemical products; base metals and articles of base metals; and mineral products.
Imports of goods and services decreased by 5.1%, largely influenced by decreased trade in mineral products; vehicles and transport equipment excluding aircraft; and vegetable products.
Recent Comments