/ 4 June 2024

GDP data: SA’s economy contracts in first quarter of 2024

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Despite the suspenison of load-shedding since early April, South Africa's economy did not benefit. Photographer: Waldo Swiegers/Bloomberg via Getty Images

South Africa’s economy contracted in the first quarter of 2024, data released on Tuesday showed.

According to Statistics South Africa, GDP fell by 0.1% in the first three months of the year, a period still marked by power outages

This was after the country narrowly avoided a technical recession — two consecutive quarters of contractions — in the last quarter of 2023. The economy grew by a revised 0.3% in the final months of last year.

The data shows that six out of 10 industries contracted during the first quarter of 2024. The biggest hit came from the manufacturing industry, which contracted by 1.4% after five of the 10 divisions reported negative growth rates. Manufacturing’s decline shaved 0.2 of a percentage point from South Africa’s GDP.

Other labour-intensive industries, including construction and mining and quarrying, also experienced contractions. South Africa’s largest industry, finance and business services, grew by a mere 0.1%.

A sluggish first-quarter performance was widely expected by economists, who cited continued power cuts as a contributing factor. The economy did not benefit from the over 60 days of suspended load-shedding since April. The country has since seen the longest break in load-shedding since February 2022.

Ahead of the GDP print’s release on Tuesday, Nedbank economists noted that first-quarter economic weakness was relatively widespread, hindered by load-shedding, low domestic demand, as well as sluggish growth in key trading partners, including Europe and China. According to the GDP data, exports decreased by 2.3% in the first quarter of the year. 

Nedbank forecast zero growth in the quarter.

First National Bank was slightly more optimistic, forecasting 0.1% quarterly growth. The bank did not count out a contraction, noting weakness in the goods-producing sectors, including freight transportation, during the quarter.

The bank’s economists noted that, despite subdued growth in the first months of the year, the second quarter could see a rebound. Second quarter growth will probably be driven by the absence of load-shedding during the period.