South Africa’s GDP fell by 0.1% in Q1 2024, a reversal from the previous quarter’s 0.3% growth. The decline was led by drops in construction, mining, and manufacturing, while agriculture surged.
Manufacturing shrank by 1.4%, with negative growth in five of its ten divisions. Mining decreased by 2.3%, mainly in platinum group metals, coal, gold, and manganese ore.
A Reuters poll of economists expected growth of 0.1%.
Construction dropped by 3.1%, notably in residential buildings. 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.
“The manufacturing industry decreased by 1.4% in the first quarter of 2024, contributing -0.2 of percentage point to the negative GDP growth. Five of the 10 manufacturing divisions reported negative growth rates in the first quarter,” Stats SA said on Tuesday.
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,” Stats SA said.
Decreases were reported for residential buildings and construction works.
Meanwhile, expenditure on real GDP decreased by 0.2% in the first quarter of 2024.
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.
“The unexpected election results mean that things have become even more uncertain, and all bets are off,” Jee-A van der Linde, a senior economist at Oxford Economics Africa, said in a research note. “A business-friendly coalition outcome would improve confidence and should unlock fresh investment that could give the economy legs to run from the second half of 2024.”
“Despite subdued growth in the first quarter, the second quarter could see a rebound, driven by the absence of load shedding and the potential boost from election-related spending,” the FNB economics team said in a note.
The Reserve Bank kept its growth forecast for this year unchanged at 1.2% last week.