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South Africa’s gross domestic product (GDP), measured by production, has lost another 1.5% due to contraction in most sectors during the third quarter, while expenditure on GDP decreased by 1.6%.
Professor Jannie Rossouw from the Wits Business School says the decrease is very serious and it means that South Africa will not be able to erase the negative performance of 2020 this year. It also means that the economy will grow less than expected and that government will receive less tax revenue.
“The fact that manufacturing contracted so much is the most serious aspect of the new GDP statistics. Add to this the decline in tourism that will reflect in the statistics for the fourth quarter and it becomes very worrying.”
However, Rossouw says, the country is not yet over the edge of the fiscal cliff, but definitely in fiscal unsustainability, where there is just no money to spend. He also pointed out the fact that government’s expenditure on employee compensation had increased, while it has been said many times that government’s wage bill is too high.
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According to Statistics SA, the decrease in GDP is due to:
Unadjusted real GDP at market prices for the first nine months of 2021 increased by 5.8% compared to the first nine months of 2020.
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Statistics SA also reported decreases in expenditure on GDP:
The main negative contributors to growth in HFCE were expenditures on:
Expenditure on health, education and the “other” category contributed positively to growth in HFCE, while spending on life insurance was the main contributor to the increase in the ‘other’ category.
Government’s final consumption expenditure increased by 0.1% in the third quarter, with an increase in employee compensation reported.
Total gross fixed capital formation was flat between the second and third quarters and the asset types recording positive growth were other assets (8.8% and contributing 1.0 percentage point), machinery and equipment (1,8% and contributing 0.7 of a percentage point) and residential buildings (1.5% and contributing 0.2 of a percentage point).
Statistics SA also reported a R915 million drawdown of inventories in the third quarter of 2021 with large decreases in manufacturing and trades contributing to the inventory drawdowns.
Although net exports contributed positively to growth in expenditure on GDP in the third quarter, the export of goods and services decreased by 5.9%, largely influenced by decreased trade in vehicles and other transport equipment, chemical products, machinery and equipment, pearls, precious and semi-precious stones, precious metals and textiles and textile articles.
Imports also decreased by 2.8%, driven largely by decreases in mineral products, base metals and articles of base metals and prepared foodstuffs, beverages and tobacco.
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