South Africa’s GDP Shrinks by 0.1% in Q1 2024: Stats SA Report
In the first quarter of 2024, South Africa’s Gross Domestic Product (GDP) experienced a minor decline of 0.1%, according to the latest data released by Statistics South Africa (Stats SA). This downturn highlights the economic challenges faced by key industries in the country.
Manufacturing Sector Faces Significant Decline
“The manufacturing industry decreased by 1.4% in the first quarter of 2024, contributing -0.2 percentage points to the negative GDP growth. Five of the ten manufacturing divisions reported negative growth rates in the first quarter,” Stats SA revealed on Tuesday.
Particularly, the motor vehicles, parts and accessories division, and the basic iron and steel, non-ferrous metal products, metal products and machinery division made the largest negative impacts on the sector’s performance.
Mining and Quarrying Industry Also Takes a Hit
The mining and quarrying industry saw a decrease of 2.3% during the first quarter, contributing -0.1 percentage points to the overall GDP decline. This sector reported reduced economic activities in platinum group metals (PGMs), coal, gold, and manganese ore.
Construction Industry Continues to Struggle
The construction industry faced a significant downturn, decreasing by 3.1% in the first quarter and contributing -0.1 percentage points to the GDP’s negative growth. Both residential building and construction works reported lower activities, further dragging down the sector.
Bright Spot: Agriculture, Forestry, and Fishing Industry
Amid a bleak economic landscape, the agriculture, forestry, and fishing industry delivered a positive performance, growing by 13.5% and contributing 0.3 percentage points to the GDP. This increase was primarily driven by higher economic activities in horticultural products.
Expenditure on GDP Shows a Decrease
In line with the economic contraction, expenditure on real GDP decreased by 0.2% in the first quarter of 2024. This follows a 0.3% increase in the previous quarter of 2023.
“Household final consumption expenditure decreased by 0.3% in the first quarter of 2024, contributing -0.2 percentage points to the total negative growth. Decreases were reported for durable goods, semi-durable goods, and services,” said Stats SA.
Household Final Consumption Expenditure (HFCE) Declines
Expenditure on clothing, footwear, and transport were the main negative contributors to the decrease in HFCE. For example, clothing and footwear expenditure fell by 7.0%, contributing -0.4 percentage points, while transport expenditure decreased by 1.3%, contributing -0.2 percentage points.
Government Consumption and Capital Formation Dips
Final consumption expenditure by the general government dropped by 0.3%, driven by reduced purchases of goods and services and compensation of employees. Similarly, total gross fixed capital formation declined by 1.8%, led by downturns in machinery and other equipment, residential buildings, and construction works.
The first quarter also saw a R5.5 billion drawdown of inventories, attributed largely to significant decreases in manufacturing, mining and quarrying, and personal services sectors.
Net Exports Provide a Ray of Hope
Despite the overall downturn, net exports contributed positively to expenditure on GDP. Exports of goods and services decreased by 2.3%, influenced by reduced trade in precious and semi-precious stones, vehicles, chemical products, and base metals. On the other hand, imports of goods and services dropped by 5.1%, due to decreased trade in mineral products, vehicles, and vegetable products.
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