South Africa’s gross domestic product (GDP) decreased by 0.2% in the third quarter of 2023, according to Statistics South Africa.
The body noted that the agriculture, forestry and fishing industry decreased by 9.6%, contributing -0.3 of a percentage point to the negative GDP growth.
StatsSA noted that this decrease was primarily due to decreased economic activities reported for field crops, animal products and horticulture products.
“The manufacturing industry decreased by 1.3% contributing -0.1 of a percentage point. Eight of the 10 manufacturing divisions reported negative growth rates in the third quarter,” StatsSA said.
It should be noted that the food, beverages and tobacco division made the largest contribution to the decrease in the third quarter.
“The petroleum, chemical products, rubber and plastic products division and the basic iron and steel, non-ferrous metal products, metal products and machinery division also made significant contributions to the contraction in this industry.”
StatsSA also noted that the construction industry decreased by 2.8%, contributing -0.1 of a percentage point.
“Decreases were reported for residential buildings, non-residential buildings and construction works. The mining and quarrying industry decreased by 1.1%.”
The measurement body also noted that the trade, catering and accommodation industry decreased by 0.2% in the third quarter.
“Decreased economic activities were reported for wholesale trade, motor trade and food and beverages,” StatsSA said.
EXPENDITURE ON GDP
Expenditure on real GDP decreased by 0.1% in this third quarter of 2023.
StatsSA said that household final consumption expenditure decreased by 0.3% in the third quarter, contributing -0.2 of a percentage point to the total negative growth. Decreases were reported for durable goods, non-durable goods and services.
RAND AND GDP FIGURES
The rand fell in value late on Monday evening against the dollar and is yet to recover on Tuesday morning, as the market waited for the GDP figures.
At 4pm on Monday the rand was trading at R18.80, this was about 1% weaker than its previous close, according to Reuters. On Tuesday at 9am, the rand had fallen to R18.81 to the dollar.
At 11.30am the rand had fallen even further to R18.78 against the dollar.
Danny Greeff at ETM Analytics told Reuters that, “the rand has very much been a passenger to broader dollar moves yesterday”.
The rand has lost almost 30% against the dollar in the past 18 months, according to zak Odendaal, an Old Mutual Wealth Investment Strategist.
SA’S ECONOMIC OUTLOOK
In November, Finance Minister Enoch Godongwana noted during his Medium Term Budget Policy Statement (MTBPS) that SA's economic outlook was weak.
“The economic outlook over the medium term remains weak, reflecting the cumulative effect of power cuts, the poor performance of the logistics sector, high inflation, rising borrowing costs, and a weaker global environment,” Godongwana said.
At the time he said that Treasury forecasts a 0.8% growth in real GDP in 2023. It should be noted that this is 0.1 percentage points lower than the growth projection at the time of the 2023 Budget.
Godongwana did note that economic growth in SA is projected to average 1.4% from 2024 to 2026.
Sadly, he noted at the time that these growth rates are not sufficient to achieve the State’s desired levels of development.