South Africa's economy deteriorated in the first quarter (Q1) with a 0.1% contraction in real gross domestic product (GDP).
This is according to the latest Statistics SA (Stats SA) data on economic growth released on Tuesday.
The decline follows a revised 0.3% increase in GDP in Q4 of 2023.
“Weaker manufacturing, mining and construction drove much of the downward momentum on the production (supply) side of the economy, while the expenditure (demand) side witnessed a decline across all components,” said Stats SA.
Agriculture rallied, but not enough to keep GDP growth in positive territory.
Six of the 10 industries on the production side of the economy performed poorly in the first quarter with manufacturing, the largest negative contributor, declining by 1.4% and pulling GDP growth down by 0.2 of a percentage point.
“Five of the 10 manufacturing divisions recorded a lacklustre quarter.
“The automotive sector was the largest negative contributor, pulled lower by a weaker demand for new vehicles and transport parts and accessories,” the organisation said.
Mining output dropped by 2.3% with platinum group metals, coal, gold and manganese ore, the largest drags on growth.
Construction continued with a downward trend, recording a fourth consecutive quarter of decline. The industry shrank further by 3.1% in Q1, pulled lower by weaker economic activity related to residential buildings and construction works.
Agriculture was the largest positive contributor to GDP, expanding by 13.5%, spurred mainly by a buoyant horticulture sector that recorded a rise in fruit production. Other positive contributors included maize and animal products.
“The trade, catering and accommodation, personal services and finance, real estate and business services industries also registered positive growth, but only just managed to keep their heads above water. Trade, catering and accommodation were marginally up on stronger wholesale trade sales, tourist accommodation, and economic activity in the restaurant, catering and fast food sector,” Stats SA said.
The personal services industry was slightly stronger due to positive growth in the health and education sectors.
Stats SA also measured the expenditure side of the GDP, providing an indication of total demand in the economy.
Government consumption, household consumption, investment (gross fixed capital formation and changes in inventories), exports and imports were all down.
“Exports decreased by 2.3%, pulling overall expenditure on GDP growth down by 0.7 of a percentage point. The decline was mainly due to weaker exports of precious stones and metals, vehicles and transport equipment (excluding aircraft), chemical products, base metals and mineral products,” Stats SA added.
Despite the overall negative growth, exports of vegetable products increased, reflecting the agriculture industry’s positive showing on the supply side of the economy.
Imports also dipped, largely influenced by decreased trade in mineral products, vehicles and transport equipment, and vegetable products.
Household final consumption expenditure decreased for the period.
“Consumers cut back on spending, particularly on clothing and footwear, transport, miscellaneous goods and services, alcoholic beverages, tobacco and narcotics, and recreation and culture,” said Stats SA.
However, spending on household furniture, appliances, restaurants and hotels, food and non-alcoholic beverages, housing, water, electricity, gas and other fuel rose.
