GDP
Stats SA, South Africa’s official statistical agency, has released data revealing that the country’s real Gross Domestic Product (GDP) saw a notable growth of 0.6% in the second quarter of 2023, covering the period from April to June.
[ 🧵] SA's #economy grew by 0,6% in Q2:2023. #GDP in Q2:2023 is lower than the peak reached in Q3:2022.#StatsSA pic.twitter.com/lbwdZsmoJ1
— Stats SA (@StatsSA) September 5, 2023
The encouraging GDP growth was driven by a strong performance among industries on the supply side of the economy, notably in manufacturing and finance. Six industries witnessed expansion during this period, contributing to the overall positive momentum.
According to Stats SA, investments in machinery and equipment, particularly those related to renewable energy, played a significant role in bolstering the country’s economy. However, despite a decline in overall household consumption, consumers continued to increase their expenditure in the restaurant and hotel sectors.
This growth in GDP follows a 0.4% rise recorded in the first quarter, indicating that South Africa’s economy is steadily recovering and gaining momentum.
The manufacturing sector expanded by 2.2%, predominantly driven by increased production in petroleum, chemical products, rubber, and plastic products. Manufacturers in metals, machinery, and equipment also experienced a fruitful quarter, with heightened demand for crude steel.
Furthermore, the automotive sector’s increased investment contributed to the production growth of transport equipment and motor vehicles. The finance industry also witnessed a positive upturn of 0.7%, buoyed by financial intermediation, insurance, and real estate services.
After two consecutive quarters of decline, South Africa’s agriculture sector successfully rebounded by recording a 4.2% rise in output. This was primarily due to increased cultivation, favorable weather conditions, and rising export demand for field crops and horticulture products.
The mining industry also fared well, posting a second successive quarter of growth. The production of platinum group metals, gold, ‘other metallic minerals,’ and coal significantly boosted the mining sector throughout this period.
In contrast to the country’s overall positive performance, some industries encountered challenges. The transport, storage, and communication sector experienced a decline of 1.9%, primarily due to lackluster performance in transport support services and decreases in land freight and road passenger transport.
The trade industry registered a decline, largely attributed to weaker figures in the retail and wholesale sectors. However, increased activity in the motor trade, tourist accommodation, and restaurant, catering, and fast-food sectors partially offset the overall decline.
The construction industry also faced difficulties in the second quarter, as a decrease in economic activity related to non-residential and residential buildings led to a loss of momentum. Although there was a marginal uptick in construction works, it was insufficient to drive the industry into positive territory.
Notably, Stats SA highlighted a marked rise in investments in imported machinery and equipment, particularly for electricity infrastructure. Gross fixed capital formation received a significant boost from this development. Additionally, there was an increase in sales of locally produced electric motors, generators, and special purpose machinery. Import demand also rose by 3.3%, driven by products related to renewable energy, batteries, vegetable products, artificial resins and plastics, base metals, and articles of base metals, as well as animal and vegetable fats and oils.
On the export front, South African exports increased by 0.9%, driven by higher trade in chemical products, prepared foodstuffs, beverages and tobacco, vehicles and transport equipment, mineral products, and machinery and electrical equipment.
Despite a decrease in household consumption in the second quarter, as consumers cut back on various goods and services, spending on restaurants and hotels continued to grow. This indicates a seventh consecutive quarter of growth in this category.
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