SA in technical recession

South Africa’s gross domestic product (GDP) decreased by 1,4% in the fourth quarter of 2019, Statistics SA said this morning. The transport, storage and communication industry decreased by 7,2% and contributed -0,6 of a percentage point to GDP growth. Decreased economic activity was reported for land and air transport, as well as transport support services.

The trade, catering and accommodation industry decreased by 3,8% and contributed -0,5 of a percentage point to GDP growth. Decreased economic activity was reported for wholesale and motor trade and accommodation.

The manufacturing industry decreased by 1,8% and contributed -0,2 of a percentage point to GDP growth.  The divisions that made the largest contributions to the decrease were motor vehicles, parts and accessories and other transport equipment; and wood and wood products, paper, publishing and printing.

The construction industry decreased by 5,9% and contributed -0,2 of a percentage point to GDP growth. Decreases were reported for residential and non-residential buildings and construction works.

The agriculture, forestry and fishing industry decreased by 7,6% and contributed -0,2 of a percentage point to GDP growth. The decreased was mainly due to a fall in the production of field crops and horticultural products.

In contrast, finance, real estate and business services increased by 2,7% and contributed 0,6 of a percentage point to GDP growth.

The mining and quarrying industry increased by 1,8% and contributed 0,1 of a percentage point to GDP growth. Increased production was reported for platinum group metals, iron ore and gold.

Expenditure on GDP

Expenditure on real gross domestic product fell by 1,2% in the fourth quarter of 2019.

Household final consumption expenditure increased by 1,4% in the fourth quarter, contributing 0,8 of a percentage point to total growth, Statistics SA said. The main positive contributors to growth in HFCE were expenditures on clothing and footwear (8,5% and contributing 0,5 of a percentage point), the ‘other’ category (3,6% and contributing 0,4 of a percentage point) and household furnishings and equipment (3,5% and contributing 0,3 of a percentage point). Expenditure on transport activities declined and contributed negatively to growth in HFCE.

Final consumption expenditure by general government decreased by 0,2%. A decrease in employment was reported in the fourth quarter.

Gross fixed capital formation decreased by 10,0%. The main contributors to the decrease were machinery and equipment, transport equipment, non-residential buildings and other assets. Weak imports of machinery and equipment contributed to the decrease in gross fixed capital formation.

There was a R40,3 billion drawdown of inventories in the fourth quarter of 2019. Large decreases were reported for the mining industry and trade.

Net exports contributed positively to growth in expenditure on GDP in the fourth quarter. Exports of goods and services were up 2,3%, largely influenced by increase trade in precious metals and stones.

Imports of goods and services decreased by 8,5%, driven largely by a decrease in imports of machinery and equipment as well as vehicles and transport equipment.

The GDP estimates are preliminary, and may routinely be revised on the basis of additional evidence that has become available by the time the subsequent quarter’s estimates are released.



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