South Africa’s economic performance was much worse
than the market had expected in the first quarter of this year, with the
economy contracting at 1.2% in real terms, as the mining and transport
industries showed sharp declines and agriculture posted its fifth
consecutive negative quarter.
The Bloomberg consensus forecast had been that the economy would contract by just 0.1%.
The worse than expected gross domestic product (GDP) figures from Statistics SA came as rating agency Fitch affirmed its rating on SA at one notch above investment grade and kept its outlook on stable. Many in the market had expected it to change the outlook to negative.
The release of the first-quarter GDP figures by Statistics SA was the first time both production-side and expenditure-side GDP have been published simultaneously, which comes after a three-year project in which Stats SA geared up to provide the expenditure side figures which were previously compiled by the Reserve Bank. The integration of the two measures of GDP under one roof is in line with international practice.
Reserve Bank governor Lesetja Kganyago formally handed over responsibility for the expenditure-side figures to Stats SA on Wednesday and statistician-general Pali Lehohla promised “high-quality data that South Africans can rely on”.
The expenditure-side GDP — which will no longer match the production side GDP, which is the official, headline figure — contracted by 0.7% in real terms the first quarter, with a particularly sharp decline of 6% in investment spending.
Household consumption spending also decreased, by 1.3% during the quarter, which was the worst decline in household spending since Stats SA started calculating the figures in 2013, and only the third quarter of negative growth in household consumption.
Exports also declined, by 7.1%, despite expectations by economists that a weaker currency should start to make South African exports more competitive on global markets, though imports fell by a similar percentage.
But government spending was the one element of the expenditure-side GDP that increased, by 1% during the quarter. The Reserve Bank quarterly bulletin, which is due to be published on June 14, will provide more detailed analysis on the figures.
On the production side, Lehohla said the primary sectors of the economy — agriculture and mining — showed a contraction of more than 15% for the quarter and, had they been excluded, the economy would have expanded by 0.5%.
Mining and quarrying fell by 18.1%, largely as a result of lower production of platinum group metals and iron ore. Transport fell by 2.7% mainly because of a decline in land transportation of passengers and freight, Stats SA said. Agriculture, forestry and fishing contracted 6.5%, mainly due to lower output of field crops and horticultural products.
The strongest performer in the first quarter was finance which was up 1.9%.
The Bloomberg consensus forecast had been that the economy would contract by just 0.1%.
The worse than expected gross domestic product (GDP) figures from Statistics SA came as rating agency Fitch affirmed its rating on SA at one notch above investment grade and kept its outlook on stable. Many in the market had expected it to change the outlook to negative.
The release of the first-quarter GDP figures by Statistics SA was the first time both production-side and expenditure-side GDP have been published simultaneously, which comes after a three-year project in which Stats SA geared up to provide the expenditure side figures which were previously compiled by the Reserve Bank. The integration of the two measures of GDP under one roof is in line with international practice.
Reserve Bank governor Lesetja Kganyago formally handed over responsibility for the expenditure-side figures to Stats SA on Wednesday and statistician-general Pali Lehohla promised “high-quality data that South Africans can rely on”.
The expenditure-side GDP — which will no longer match the production side GDP, which is the official, headline figure — contracted by 0.7% in real terms the first quarter, with a particularly sharp decline of 6% in investment spending.
Household consumption spending also decreased, by 1.3% during the quarter, which was the worst decline in household spending since Stats SA started calculating the figures in 2013, and only the third quarter of negative growth in household consumption.
Exports also declined, by 7.1%, despite expectations by economists that a weaker currency should start to make South African exports more competitive on global markets, though imports fell by a similar percentage.
But government spending was the one element of the expenditure-side GDP that increased, by 1% during the quarter. The Reserve Bank quarterly bulletin, which is due to be published on June 14, will provide more detailed analysis on the figures.
On the production side, Lehohla said the primary sectors of the economy — agriculture and mining — showed a contraction of more than 15% for the quarter and, had they been excluded, the economy would have expanded by 0.5%.
Mining and quarrying fell by 18.1%, largely as a result of lower production of platinum group metals and iron ore. Transport fell by 2.7% mainly because of a decline in land transportation of passengers and freight, Stats SA said. Agriculture, forestry and fishing contracted 6.5%, mainly due to lower output of field crops and horticultural products.
The strongest performer in the first quarter was finance which was up 1.9%.
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