SA GDP falls by 2%

THEBE MABANGA

SOUTH Africa has just experienced calm before the storm as Statistics SA reported on Tuesday that  gross domestic product (GDP) decreased by 2,0% in the first quarter of 2020.

This would be up to and including the end of March when the National lockdown began, and two weeks after the National State of Disaster was declared by President Cyril Ramaphosa. 

Stats SA said mining and quarrying production decreased by 21.5% and contributed 1.7 percentage points to GDP growth.

Manufacturing contracted by 8.5% in the first quarter with seven of its ten sub sectors reporting negative growth over the period. 

“The electricity, gas and water industry contracted by 5.6% in the first quarter, largely due to decreases in electricity distribution and water consumption,” the statistics agency said of the period when production began to slow down. 

The construction industry continued its declining trend and decreased by 4.7%, with decreases reported for residential buildings, non-residential buildings and other construction works.

Stats SA noted that the agriculture, forestry and fishing industry increased by 27.8% and contributed 0.5 of a percentage point to GDP growth.

The increase was mainly due to increases in the production of field crops, horticultural products and animal products as food was declared an essential supply during the lockdown 

Finance, real estate and business services increased by 3.7% in the first quarter.

The sector has been a key growth sector of over the past two decades. 

General government services increased by 1.0%, mainly attributed to increased employment in provincial government and higher education institutions. this will likely be reversed in the years ahead as government reins in spending and reduces its wage bill. 

Stats SA also reported that expenditure on real gross domestic product fell by 2.3% in the first quarter of 2020.

This again is a slight fall before plunge due to the lockdown.

This is the method of measuring economic activity preferred by the Reserve Bank. 

Household final consumption expenditure increased by 0.7% in the first quarter, contributing 0.4 of a percentage point to total growth.

The main positive contributors were expenditures on food and non-alcoholic beverages, furnishings, household equipment, maintenance and housing and utilities.

It is unclear if some of this spending was in preparation for the lockdown. Expenditure on transport and clothing and footwear decreased and contributed negatively to growth. 

Gross fixed capital formation, a measure of spending on infrastructure,   decreased by 20.5%, spending on machinery and transport equipment, including on imports, fell as other parts of the world were already on partial lockdown. 

Finally, Stats SA reported that exports of goods and services were down 2.3% in the first quarterly.

This was mainly due to decreased trade in precious metals, base metals and travel services as the restrictions kicked in.

“Imports of goods and services decreased by 16.7%, driven largely by decreases in machinery and electrical equipment, mineral products and travel services,” Stats SA said.

(Compiled by Inside Politics staff)

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