South Africa GDP Contracts the Most since 2009

The South African economy shrank a seasonally adjusted annualized 2.2 percent on quarter in the first three months of 2018, reversing from a 3.1 percent growth in the previous period which was the highest in 1-1/2 years. It compares with market expectations of a 0.5 percent decline. It is the biggest contraction since the first quarter of 2009 as production declined mostly for field crops, horticultural products, platinum group metals, iron ore and steel.

The biggest downward contributions came from mining, manufacturing and agriculture.

The mining sector went down 9.9 percent, extending the 4.4 percent drop in Q4 and mainly due to lower production of gold and ‘other’ metal ores, mainly platinum group metals and iron ore.

Manufacturing decreased 6.4 percent, the biggest drop since Q2 2015 and reversing from a 4.3 percent gain in Q4. Six of the ten manufacturing divisions shrank, with the largest downward contributions coming from basic iron and steel, non-ferrous metal products, metal products and machinery, petroleum, chemical products, rubber and plastic products.

The agriculture, forestry and fishing industry slumped 24.2 percent, reversing from a 37.5 percent growth in Q4, mainly because of a drop in production of field crops and horticultural products.

The trade, catering and accommodation sector declined 3.1 percent after a 4.8 percent jump in Q4 and construction decreased by 1.9 percent after a 1.4 percent decrease in Q4, marking the fifth straight quarter of falls. Decreases were reported for residential buildings and construction works.

The electricity, gas and water industry contracted by 0.5 percent after a 3.3 percent growth in Q4 and largely due to lower electricity production.

On the other hand, main positive contributions came from finance, real estate and business services (activities up 1.1 percent compared to 2.5 percent in Q4) and government (1.8 percent compared to 1.4 percent). 

Year-on-year, the economy grew 0.8 percent, easing from a 1.5 percent expansion in the previous period and well below forecasts of a 1.9 percent rise. It is the lowest annual growth rate since the second quarter of 2016.

South Africa GDP Contracts the Most since 2009

Statistics South Africa | Joana Taborda |
6/5/2018 10:09:46 AM