South Africa’s Gross Domestic Product (GDP) declined by 0.3% in the third quarter of 2024, following a modest 0.3% growth in the second quarter, according to recent data from Statistics South Africa.
The downturn in the third quarter marks a setback for the country’s economic recovery, as several key sectors experienced declines.
Key Industry Performance:
Agriculture, Forestry, and Fishing
: The agriculture sector saw a sharp contraction of 28.8%, contributing -0.7 percentage points to the overall negative GDP growth. The decline was largely attributed to a significant drop in field crop production.
Transport, Storage, and Communication
: This industry contracted by 1.6%, contributing -0.1 percentage points to GDP, driven by decreased activity in land transport and transport support services.
Trade, Catering, and Accommodation
: The sector experienced a 0.4% decline, with reduced activity in wholesale trade, motor trade, and food and beverage services.
General Government Services
: Government services saw a minor decrease of 0.1%, primarily due to lower employment levels in national and provincial government sectors and other public institutions.
Finance, Real Estate, and Business Services
: A bright spot in the data, this sector grew by 1.3%, contributing 0.3 percentage points to GDP. The growth was driven by increased activity in financial services, insurance, real estate, and other business services.
Personal Services
: Personal services grew by 0.5%, contributing 0.1 percentage points, with increases noted in the health and education subsectors.
Manufacturing:
Manufacturing rose by 0.5%, contributing 0.1 percentage points to GDP. Positive growth was driven by the basic iron and steel, metal products, and machinery divisions.
Mining and Quarrying
: The mining sector grew by 1.2%, contributing 0.1 percentage points to GDP. The increase was driven by higher production of manganese and chromium ore.
Expenditure on GDP:
On the expenditure side, real GDP decreased by 0.2% in the third quarter, following a 0.4% increase in the second quarter.
Household Final Consumption Expenditure (HFCE)
: HFCE increased by 0.5%, contributing 0.3 percentage points to the overall GDP decline. Spending on non-durable goods, food, housing, and recreation showed notable increases.
Government Consumption Expenditure:
Expenditure by the government fell by 0.5%, contributing -0.1 percentage points to GDP, largely driven by reduced government spending on goods, services, and compensation to employees.
Gross Fixed Capital Formation
: Investment in capital goods grew by 0.3%, with contributions from construction works (1.4%) and machinery (0.5%).
Inventory Drawdown
: A significant inventory drawdown of R6.6 billion was recorded, primarily due to reductions in manufacturing, electricity, and mining sectors.
Net Exports
: Exports of goods and services declined by 3.7%, largely due to decreased trade in precious metals, vehicles, and machinery. Imports also fell by 3.9%, driven by a decrease in imports of vehicles, mineral products, and base metals.
The third-quarter GDP contraction highlights ongoing challenges for the South African economy, with several sectors showing signs of weakness.
However, growth in industries such as finance, real estate, and mining suggests there are still areas of resilience within the economy as the country grapples with these difficult conditions.
