Saturday, June 22nd, 2024

Economic Contraction: SA Records 0.7% Smaller Economy in Year-on-Year Comparison

Economic Contraction: SA Records 0.7% Smaller Economy in Year-on-Year Comparison

The South African economy experienced a 0.2% contraction in growth during the transition from the second to the third quarter. This decline was slightly worse than initially anticipated, as analysts had predicted a 0.1% contraction, according to Reuters’ polls.

Comparing the economy to the same period last year revealed a 0.7% shrinkage, marking the first negative figure since the first quarter of 2021. This decline reflected a widespread weakness across various sectors, with six out of ten industries experiencing a year-on-year decrease in activity, as highlighted by PwC senior economist Christie Viljoen.

Several key industries contributed significantly to this downturn. The agriculture, forestry, and fishing sector reported a 9.6% decline, mainly attributed to reduced economic activities in field crops, animal products, and horticulture. Likewise, the manufacturing industry experienced a 1.3% drop, while the construction sector declined by 2.8%.

This third-quarter decline marks the first economic setback for the South African economy in 2023. The GDP had shown growth of 0.4% in the first quarter and 0.5% in the second.

Despite a reduction in the intensity of power shortages from the second quarter, there was still a substantial 5,942GW of electricity shed during the quarter, with an increase of 121 more hours of load shedding, as noted in a report by Nedbank.

Household final consumption expenditure decreased by 0.3%, mainly attributed to reduced spending on transport, housing, water, electricity, gas, and other fuels.

Exports of goods and services saw a 0.6% increase, while imports faced an 8.6% drop during this period.