South Africa avoids a technical recession

South Africa’s gross domestic product (GDP) increased by 0.4% in the first quarter of 2023, ensuring the country avoids a technical recession.

StatsSA released South Africa’s GDP data on Tuesday, which showed marginal growth in the economy.

This news follows the shock GDP decline of 1.3% in the fourth quarter of 2022 amid record levels of load shedding and a significant downturn in economic activity, which made many experts predict a technical recession.

According to StatsSA, the manufacturing industry increased by 1.5% in the first quarter, contributing 0.2 of a percentage point to GDP growth.

Four of the ten manufacturing divisions reported positive growth rates in the first quarter, with the food and beverages division making the largest contribution to the increase in the first quarter. The petroleum, chemical products, rubber and plastic products division also made a significant contribution to growth in this industry.

The finance, real estate and business services industry also increased by 0.6% in the first quarter, contributing 0.2 of a percentage point to GDP growth.

Expenditure on real GDP also increased by 0.4% in Q1 2023.

Household final consumption expenditure (HFCE) increased by 0.4%, contributing 0.3 of a percentage point to total growth. Increases were reported for semi-durable and non-durable goods. 

The main positive contributors to the increase in HFCE were expenditures on restaurants and hotels (6.9%), health (2.6%), food and non-alcoholic beverages (1.0%), transport (0.9%) and clothing and footwear (2.3%).

Final consumption expenditure by general government increased by 1.2% in the first quarter, mainly driven by increases in goods and services and compensation of employees.

Total gross fixed capital formation increased by 1.4% in the first quarter. The main positive contributors to the increase were other assets, machinery and other equipment, non-residential buildings and residential buildings.

There was a R35 billion build-up of inventories in the first quarter of 2023. Large increases in mining and quarrying, trade, catering and accommodation and personal services, contributed to this build-up.

Net exports contributed negatively to growth in expenditure on GDP in the first quarter. Exports of goods and services increased by 4.1%.

This was largely influenced by increased trade in base metals and articles of base metals; vegetable products; prepared foodstuffs, beverages and tobacco; and machinery and electrical equipment.

Imports of goods and services increased by 4.4%, largely influenced by increased trade in machinery and equipment; chemical products; vehicles and transport equipment; and prepared foodstuffs, beverages and tobacco.