South African Economy Enters Recession In Q1

The South African economy unexpectedly contracted an annualized 0.7 percent on quarter in the first three months of 2017, following a 0.3 percent drop in the previous period and compared to market expectations of a 0.9 percent expansion. It is the first recession since 2009 as both trade and manufacturing recorded negative growth rates.

The largest negative contribution came from trade, catering and accommodation which contracted 5.9 percent, following a 2.1 percent rise in the previous period. Manufacturing also dragged down the GDP, falling for the third straight quarter (-3.7 percent from -3.1 percent), as production of petroleum, chemical products, rubber and plastic products decreased.

Additional downward pressure came from finance, real estate and business services (-1.2 percent from 1.6 percent); transport, storage and communication (-1.6 percent from 2.6 percent ) and utilites (-4.8 percent from 2.4 percent).

In contrast, mining rebounded (12.8 percent from -11.5 percent), boosted by higher production of gold and other metal ores including platinum. Also, agriculture surged 22.2 percent, coming back to growth after 8 straight quarters of declines. The rebound was mainly driven by a jump in production of field crops and horticultural products pointing to a recovery after one of the toughest droughts in recent history.

Year-on-year, the GDP rose 1 percent, higher than 0.7 percent in the previous period and in line with market expectations. It is the highest growth rate since the second quarter of 2015 as mining rebounded and agriculture grew the most in 2 years.  

South African Economy Enters Recession In Q1

Statistics South Africa | Joana Taborda |
6/6/2017 11:57:40 AM