South Africa’s GDP shrinks in third quarter

South Africa’s gross domestic product (GDP) decreased by 0.2% in the third quarter of 2023 as five industries recorded negative growth between the second quarter and the third quarter of 2023.

StatsSA released South Africa’s GDP data today, which revealed that South Africa’s economy shrunk in the third quarter of 2023 after growing by 0.5% in Q2. 

According to StatsSA, five industries recorded negative growth between Q2 and Q3.

The agriculture, forestry and fishing industry decreased by 9.6% in Q3, contributing -0.3 of a percentage point to the negative GDP growth. 

This was primarily due to decreased economic activities reported for field crops, animal products and horticulture products.

The manufacturing industry decreased by 1.3% in the third quarter, contributing -0.1 of a percentage point.

Eight of the ten manufacturing divisions reported negative growth rates in the third quarter.

The food, beverages and tobacco division made the largest contribution to the decrease in the third quarter.

The construction industry decreased by 2.8% in the third quarter, contributing -0.1 of a percentage point. Decreases were reported for residential buildings, non-residential buildings and construction works

The mining and quarrying industry increased by 1.1% in Q3. Decreased economic activities were reported for platinum group metals (PGMs), gold, other metallic minerals and coal.

The trade, catering and accommodation industry decreased by 0.2% in the third quarter. Decreased economic activities were reported for wholesale trade, motor trade and food and beverages.

Expenditure on real GDP also decreased by 0.1% in Q3 2023.

Household final consumption expenditure (HFCE) decreased by 0.3%, contributing -0.2 of a percentage point to the total negative growth. Decreases were reported for durable, non-durable goods and services. 

The main negative contributors to the HFCE were expenditures on transport (-1.6%), housing, water, electricity, gas and other fuels (-0.8%), the ‘other’ category (-0.7%) and recreation and culture (-1.1%).

Positive contributors were expenditures on clothing and footwear, restaurants and hotels, health, education, and food and non-alcoholic beverages.

Final consumption expenditure by the general government increased by 0.3% in the third quarter, mainly driven by an increase in the compensation of employees.

Total gross fixed capital formation decreased by 3.4%. The main negative contributors to the increase were machinery and other equipment (-3.2%), transport equipment (-6.7%), other assets (-5.7%) and construction works (-3.1%).

There was a R44.5 billion drawdown of inventories in Q3.

Significant decreases in three industries, namely manufacturing, mining and quarrying, and transport, contributed to the inventory drawdown.

Net exports contributed negatively to growth in expenditure on GDP in the third quarter. Exports of goods and services increased by only 0.6%.

This was largely influenced by increased trade in vehicles and transport equipment; pearls, precious and semi-precious stones; precious metals; and vegetable products.

This was primarily 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 decreased by 8.6%, largely influenced by decreased trade in machinery and electrical equipment, chemical products, artificial resins and plastics, base metals and articles of base metals, vegetable products, and vehicles and transport equipment.