South Africa’s economy sees slight growth despite headwinds

South Africa’s gross domestic product (GDP) increased by 0.6% in the second quarter of 2023. However, the country’s exports were down significantly in the quarter.

StatsSA released South Africa’s GDP data today, showing marginal economic growth.

This is higher compared to Q1 GDP growth of 0.4%, which followed the shock GDP decline of 1.3% in the fourth quarter of 2022 amid record load-shedding levels and a significant economic activity downturn.

According to StatsSA, the manufacturing industry increased by 2.2% in the first quarter, contributing 0.3 of a percentage point to GDP growth.

Nine of the ten manufacturing divisions reported positive growth rates in the first quarter, compared to only four in Q1. The petroleum, chemical products, rubber and plastic products division made the largest contribution to the increase in the second quarter.

The finance, real estate and business services industry also increased by 0.7% in the second quarter, contributing 0.2 of a percentage point to GDP growth.

“Increased economic activities were reported for financial intermediation, insurance and real estate activities,” Stats SA said.

The agriculture, forestry and fishing industry increased by 4.2% in Q2, contributing 0.1 of a percentage point to GDP growth. 

Stats SA attributed this to increased economic activities reported for field crops and horticulture products.

The personal services industry increased by 0.7% in the second quarter, contributing 0.1 of a percentage point to GDP growth. Increased economic activities were reported for health and education.

The mining and quarrying industry increased by 1.3% in Q2, contributing 0.1 of a percentage point to GDP growth. Increased economic activities were reported for platinum group metals (PGMs), gold, other metallic minerals and coal.

Expenditure on real GDP also increased by 0.6% in Q2 2023.

Household final consumption expenditure (HFCE) decreased by 0.3%, compared to an increase of 0.4% in Q1, contributing -0.2 of a percentage point to total growth. Decreases were reported for semi-durable, durable, and non-durable goods. 

The main negative contributors to the HFCE were expenditures on food and non-alcoholic beverages (-1.2%), furnishings, household equipment and maintenance (-2.1%), ‘other’ category (-0.9%), housing, water, electricity, gas and other fuels (-0.5%), recreation and culture (-0.9%) and clothing and footwear (-1.0%).

Expenditures on restaurants and hotels, transport, health and education contributed positively to growth in HFCE in the second quarter.

Final consumption expenditure by the general government increased by 1.7% in the first quarter, mainly driven by increases in goods and services and compensation of employees.

Total gross fixed capital formation increased by 3.9%, compared to 1.4% in the first quarter. The main positive contributors to the increase were machinery and other equipment (11.0%) and construction works (0.3%).

There was a R58.9 billion build-up of inventories in Q2, compared to only R35 billion in Q1. Significant increases in three industries, namely manufacturing, trade, catering and accommodation and mining and quarrying, contributed to the inventory build-up.

Net exports contributed negatively to growth in expenditure on GDP in the second quarter. Exports of goods and services increased by only 0.9%, compared to 4.1% in Q1.

This was largely influenced by increased trade in chemical products; prepared foodstuffs, beverages and tobacco; vehicles and transport equipment; mineral products; and machinery and electrical equipment.

Imports of goods and services increased by 3.3%, compared to 4.4% in Q1, largely influenced by increased trade in machinery and electrical equipment, vegetable products, artificial resins and plastics, base metals and articles of base metals, and animal and vegetable fats and oil.