South Africa's GDP Contracts by 0.1% in Q1 2024

South Africa's Gross Domestic Product (GDP) saw a slight contraction of 0.1% in the first quarter of 2024, according to Statistics South Africa (Stats SA).

“The manufacturing industry decreased by 1.4% in the first quarter of 2024, contributing -0.2 of a percentage point to the negative GDP growth. Five of the ten manufacturing divisions reported negative growth rates in the first quarter,” Stats SA reported on Tuesday. The divisions for motor vehicles, parts and accessories, and other transport equipment, along with basic iron and steel, non-ferrous metal products, metal products, and machinery, were the most significant contributors to this decline.

Sectoral Performance

Manufacturing: Declined by 1.4%, contributing -0.2 percentage points to GDP. The motor vehicles, parts and accessories division, and the basic iron and steel division were the largest negative contributors.

Mining and Quarrying: Fell by 2.3%, contributing -0.1 percentage points. Reduced activities in platinum group metals (PGMs), coal, gold, and manganese ore were noted.

Construction: Dropped by 3.1%, contributing -0.1 percentage points, with declines in residential buildings and construction works.

Agriculture, Forestry, and Fishing: Increased by 13.5%, contributing 0.3 percentage points due to higher economic activities in horticulture products.

Expenditure on GDP

Expenditure on real GDP also fell by 0.2% in the first quarter, following a 0.3% increase in the previous quarter.

Household Final Consumption Expenditure (HFCE): Decreased by 0.3%, contributing -0.2 percentage points. Significant declines were seen in expenditures on clothing and footwear (-7.0%), transport (-1.3%), and other categories (-1.3%).

Final Consumption Expenditure by General Government: Decreased by 0.3%, contributing -0.1 percentage points, driven by reduced purchases of goods and services and lower compensation of employees.

Total Gross Fixed Capital Formation: Decreased by 1.8%, contributing -0.3 percentage points. The main negative contributors were machinery and other equipment (-1.4%), residential buildings (-4.3%), and construction works (-2.5%).

Inventory and Trade

There was a R5.5 billion drawdown in inventories, with significant reductions in manufacturing, mining and quarrying, and personal services.

Net Exports: Contributed positively to GDP expenditure.

Exports of Goods and Services: Decreased by 2.3%, influenced by reduced trade in pearls, precious stones, precious metals, vehicles and transport equipment, chemical products, base metals, and mineral products.

Imports of Goods and Services: Decreased by 5.1%, driven by lower trade in mineral products, vehicles and transport equipment, and vegetable products.

These figures reflect the challenges facing South Africa's economy, including declines in key industrial sectors and consumer spending, as well as broader global trade dynamics.