SA dodges recession by 0.1% GDP growth in fourth quarter

South Africa narrowly avoided a recession with a 0.1% GDP growth in the fourth quarter of 2023, as economists predicted. Annual real GDP increased by 0.6% in 2023, after a 1.9% increase in 2022.

According to Statistics SA, the annual increase in real gross domestic product (GDP) was primarily driven by higher economic activities in finance, real estate and business services, which contributed 0.4 of a percentage point based on growth of 1.8%.

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Additionally, transport, storage and communication contributed 0.3 of a percentage point based on growth of 4.3%, personal services, which contributed 0.3 of a percentage point based on growth of 2.0% and manufacturing, which contributed 0.1 of a percentage point based on growth of 0.5%.

The agriculture, forestry and fishing and trade, catering and accommodation, as well as the electricity, gas and water and mining and quarrying divisions recorded negative growth in 2023.

Expenditure on GDP increased by 0.7% in 2023, after an increase of 1.9% in 2022. Household final consumption expenditure increased by 0.7% and contributed 0.5 of a percentage point.

Main contributors to GDP in 2023

The data shows that the main contributors to the growth of 0.7% in household final consumption expenditure were:

• spending at restaurants and hotels increased 20.3% and contributed 0.9 of a percentage point
• health that increased 3.6% and contributed 0.2 of a percentage point
• clothing and footwear that increased 5.0% and contributed 0.2 of a percentage point
• communication that increased 2.3% and contributed 0.1 of a percentage point
• transport that increased 0.5% and contributed 0.1 of a percentage point and
• education that increased 1.7% and contributed 0.1 of a percentage point.

Gross fixed capital formation increased 4.2%, contributing 0.6 of a percentage point to total growth, while changes in inventories contributed -0.6 of a percentage point to total growth. Net exports contributed -0.2 of a percentage point to growth in expenditure on GDP.

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GDP in the fourth quarter of 2023

The data from Statistics SA shows that the transport, storage and communication industry increased 2.9% in the fourth quarter, contributing 0.2 of a percentage point to GDP growth, while increased economic activities were reported for land transport, air transport, transport support services and communications.

The mining and quarrying industry increased 2.4% in the fourth quarter, contributing 0.1 of a percentage point, with increased economic activities reported for platinum group metals (PGMs), coal, chromium ore and diamonds.

The personal services industry increased 0.9% in the fourth quarter, contributing 0.1 of a percentage point, with increased economic activities reported for health and education.

The finance, real estate and business services industry increased 0.6% in the fourth quarter, contributing 0.1 of a percentage point, with increased economic activities reported for financial intermediation, auxiliary activities, real estate activities and business services.

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These sectors decreased in the fourth quarter

However, the trade, catering and accommodation industry decreased 2.9% in the fourth quarter, contributing -0.3 of a percentage point, with decreased economic activities reported for wholesale trade, retail trade, motor trade, accommodation and food and beverages.

The agriculture, forestry and fishing industry continued its drag on GDP, decreasing 9.7% in the fourth quarter and contributing -0.2 of a percentage point to GDP growth, primarily due to decreased economic activities reported for field crops, animal products and horticulture products.

According to Statistics SA, expenditure on real GDP increased 0.1% in the fourth quarter. Household final consumption expenditure increased 0.2% in the fourth quarter, contributing 0.1 of a percentage point to total growth, with increases reported for durable goods and services.

The main positive contributors to the increase in household final consumption expenditure were:

• spending in the ‘other’ category that increased 3.1% and contributed 0.4 of a percentage point
• transport that increased 0.4% and contributed 0.1 of a percentage point and
• communication that increased 1.1% and contributed 0.1 of a percentage point.

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Main negative contributors in the fourth quarter

The main negative contributors were expenditure on housing, water, electricity, gas and other fuels, as well as food and non-alcoholic beverages, clothing and footwear and restaurants and hotels.

General government’s final consumption expenditure decreased 0.3% in the fourth quarter, mainly driven by decreases in buying goods and services and compensation for employees.

Total gross fixed capital formation also decreased 0.2% in the fourth quarter. The main negative contributors to the decrease were:

• residential buildings that decreased by -3,9% and contributed -0.5 of a percentage point
• transport equipment that decreased by -3,0% and contributed -0.3 of a percentage point
• construction works that decreased by -1.1% and contributed -0.2 of a percentage point and
• machinery and other equipment that decreased by -0.4% and contributed -0.2 of a percentage point.

Statistics SA says there was a R7.5 billion build-up of inventories in the fourth quarter, with large increases in manufacturing, trade, catering and accommodation and electricity gas and water.

Net exports contributed negatively to expenditure on GDP in the fourth quarter. Exports of goods and services increased 0.6%, largely influenced by increased trade in prepared foodstuffs, beverages and tobacco, vegetable products, chemical products and base metals and articles of base metals.

Imports of goods and services increased 4.0%, largely influenced by increased trade in mineral, chemical and vegetable products.