GDP decreases in first quarter as expected

GDP decreased in the first quarter of 2024, as economists expected, with real GDP measured by production decreasing by 0.1% after it increased by 0.3% in the fourth quarter of 2023.

Risenga Maluleke, statistician-general at Statistics SA, announced the gross domestic product (GDP) figures for the first quarter of 2024 on Tuesday.

Six industries recorded negative growth between the fourth quarter of 2023 and the first quarter of 2024:

• The manufacturing industry decreased by 1.4% and contributed -0.2 of a percentage point to the negative GDP growth
• The mining industry decreased by 2.3% and contributed -0.1 of a percentage point
• The construction industry decreased by 3.1% and contributed -0.1 of a percentage point.

The agriculture industry was the main positive contributor, increasing by 13.5% and contributing 0.3 of a percentage point despite foot-and-mouth disease in the cattle industry, African swine fever in pigs, avian influenza in chickens and drier weather conditions adversely affecting seed and grain output.

Output of maize is forecast to decline by 19%, soybeans by 36% and sunflower seeds by 10%, while the groundnut, sorghum and dry beans harvests are estimated to be higher than the previous season.

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Growth in expenditure on GDP

Household final consumption expenditure decreased by 0.3% in the first quarter, contributing -0.2 of a percentage point to the total negative growth.

Government final consumption expenditure decreased by 0.3%, contributing -0.1 of a percentage point.

Gross fixed capital formation decreased by 1.8%, contributing -0.3 of a percentage point, while changes in inventories in the first quarter contributed -0.5 of a percentage point. Net exports contributed 0.9 of a percentage point, following decreases of 2.3% in exports and 5.1% in imports.

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Primary and secondary sector GDP

Maluleke said in the primary sector the agriculture, forestry and fishing industry increased by 13.5% in the first quarter, contributing 0.3 of a percentage point to the negative GDP growth, primarily due to increased economic activities reported for horticulture products.

The mining and quarrying industry decreased by 2.3%, contributing -0.1 of a percentage point, with decreased economic activities reported for platinum group metals (PGMs), coal, gold and manganese ore.

He said in the secondary sector, the manufacturing industry decreased by 1.4% in the first quarter, 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 electricity, gas and water industry decreased by 0.4%, largely due to decreases in electricity production and consumption and water consumption.
• The construction industry decreased by 3.1%, contributing -0.1 of a percentage point with decreases reported for residential buildings and construction works.

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Tertiary sector had more good GDP news

In the tertiary sector Maluleke said the trade, catering and accommodation industry increased by 0.1% in the first quarter of 2024, while increased economic activities were reported for wholesale trade, accommodation and food and beverages.

The transport, storage and communication industry decreased by 0.5%, with decreased economic activities reported for land transport. The finance, real estate and business services industry increased by 0.1% in the first quarter. Increased economic activities were reported for financial intermediation, insurance and pension funding and real estate activities.

General government services decreased by 0.1% in the first quarter, mainly due to decreased employment in the provincial governments.

The personal services industry increased by 0.1% in the first quarter, with increased economic activities reported for health and education.

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Expenditure on GDP shows household expenditure decreased

Maluleke said expenditure on GDP in the first quarter saw household final consumption expenditure decreasing by 0.3%, contributing -0.2 of a percentage point to the total negative growth. Decreases were reported for durable goods, semi-durable goods and services.

The main negative contributors to the decrease in household final consumption expenditure were expenditure on clothing and footwear (-7.0 and contributing -0.4 of a percentage point), transport (-1.3% and contributing -0.2 of a percentage point) and the ‘other’ category2 (-1.3% and contributing -0.2 of a percentage point).

The main positive contributors were expenditure on food and non-alcoholic beverages, furniture, household equipment and maintenance, housing, water, electricity, gas and other fuel and restaurants and hotels.

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Government final consumption expenditure

According to Maluleke final consumption expenditure by general government decreased by 0.3% in the first quarter, contributing -0.1 of a percentage point to the total negative growth, mainly driven by decreases in purchases of goods and services and compensation of employees.

He said total gross fixed capital formation decreased by 1.8% in the first quarter, contributing -0.3 of a percentage point to the total negative growth. The main negative contributors to the decrease were machinery and other equipment (-1.4% and contributing -0.6 of a percentage point), residential buildings (-4.3% and contributing -0.5 of a percentage point) and construction works (-2.5% and contributing -0.4 of a percentage point.

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Exports and imports

Regarding exports and imports of goods and services, Maluleke said exports of goods and services decreased by 2.3%, largely influenced by a decreased trade in pearls, precious and semi-precious stones and precious metals, vehicles and transport equipment excluding aircraft, chemical products, base metals and articles of base metals and mineral products.

Imports of goods and services decreased by 5.1%, largely due to decreased trade in mineral products, vehicles and transport equipment excluding aircraft and vegetable products.