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SA Economy shrinks by 0,15  in the first quarter of 2024

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Phuti Mosomane

South Africa’s gross domestic product (GDP) decreased by 0,1% in the first quarter of 2024, according to Stats SA. The decline has been fueled by the manufacturing sector which has decreased by 1,4% in  Q1 of 2024, contributing -0,2 of a percentage point to the negative GDP growth. 

Five of the ten manufacturing divisions reported negative growth rates in the first quarter.

The motor vehicles, parts and accessories and other transport equipment division and the basic iron and steel, non-ferrous metal products, metal products and machinery division made the largest negative contributions to the decrease in the first quarter.

The mining and quarrying industry decreased by 2,3% in the first quarter, contributing -0,1 of a percentage point. Decreased economic activities were reported for platinum group metals (PGMs), coal, gold and manganese ore.

The construction industry decreased by 3,1% in the first quarter, contributing -0,1 of a percentage point. Decreases were reported for residential buildings and construction works.

However, the agriculture, forestry and fishing industry increased by 13,5% in the first quarter of 2024, contributing 0,3 of a percentage point. This was primarily due to increased economic activities reported for horticulture products.

Expenditure on real gross domestic product decreased by 0,2% in the first quarter of 2024, following an increase of 0,3% in the fourth quarter of 2023.

Household final consumption expenditure decreased by 0,3% in the first quarter of 2024, contributing -0,2 of a percentage point to the total negative growth. Decreases were reported for durable goods, semi-durable goods and services.

Congress of South African Trade Unions (COSATU) spokesperson Zanele Sabela said the federation is disappointed by the decrease in Gross Domestic Product (GDP) in the first quarter of this year.  

Sabela said whilst the level of growth the country has experienced in recent years has been marginal, Cosatu was hopeful it would continue an upward trajectory.

“It is a pity that the sizable cuts to petrol and diesel prices will provide minimal relief to workers and the economy,” she said.

The federation said the drop in GDP is a reminder that the economy remains fragile and needs support from the state to grow, investment from the private sector, a well-functioning and resourced state, employment programmes and relief for the unemployed.

Key to growing the economy is accelerating Eskom’s maintenance and generation investments to ensure load shedding remains a thing of the past; that Transnet and Prasa are secured and fully modernised to enable commuters and products to reach their destinations on time; that local government is sufficiently resourced and capacitated to provide quality public and municipal services the economy and working class communities depend upon; and that the fight against crime and corruption is accelerated, Sabela said.

Similarly, the work being done to remove the obstacles to economic growth and boost local procurement through the sectoral master plans is boosted, including reviving the buy local campaign, she added.

Whilst these must be accelerated, it is critical that the Presidential Employment Stimulus and other employment programmes to help young people enter the labour market be massively expanded, the SRD Grant be raised to the Food Poverty Level and its participants linked to skills and employment programmes.

“It is equally important that the election of President Cyril Ramaphosa and the appointment of the 7th administration conclude soon to enable the government to come up with a mass stimulus package to spur the economy, slash unemployment and poverty, and deliver quality public services,” she added.

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