/ 5 March 2024

South Africa’s economy narrowly avoids a recession


South Africa’s economy expanded by 0.1% in the fourth quarter of 2023, helped by significant recoveries in the transport and mining sectors and narrowly avoiding a technical recession after contracting by 0.2% in the third quarter.

The transport, storage and communication industry increased by 2.9% in the fourth quarter as increased economic activity was reported for land and air transport, as well as transport support services and communications, according to data released by Statistics South Africa on Tuesday.

The mining and quarrying industry expanded by 2.4% as a result of higher activity for platinum group metals, coal, chromium ore and diamonds. 

According to the StatsSA data, six out of 10 industries recorded positive growth during the last three months of 2023. The trade, catering and accommodation industry was the main negative contributor, decreasing by 2.9%. 

The agricultural sector had been expected to bounce back from its third quarter performance where it was a drag on growth, declining by 9.6%. But the recovery did not materialise as it contracted by another 9.7% in the fourth quarter.

Ahead of Tuesday’s GDP print, Old Mutual chief group economist Johann Els predicted growth of 0.5% for the fourth quarter, on the back of recoveries in mining and manufacturing, alongside strong growth in electricity production. 

According to StatsSA, the electricity, gas and water industry increased by 2.3% in the fourth quarter, largely the result of an uptick in electricity production and consumption. 

The statistics agency said South Africa’s real GDP grew 0.6% in 2023, primarily led by higher economic activities in finance, real estate and business services. This number is in line with the treasury’s GDP growth estimate for last year, which it revised down to 0.6% because of widespread power cuts, operational and maintenance failures in freight rail and at ports, as well as high living costs.  

The agriculture, forestry and fishing; trade, catering and accommodation; electricity, gas and water; and mining and quarrying industries recorded negative growth in 2023. 

StatsSA said expenditure on GDP increased by 0.7% in 2023, after rising by 1.9% the previous year. The main contributors to the 2023 growth were expenditures on restaurants and hotels, health clothing and footwear.