The South African economy moved into recession with the reported decrease of 0,7% in GDP during the first quarter of 2017, following a 0,3% contraction in the fourth quarter of 2016.
Using the widely accepted measure of ‘recession’ as two (or more) consecutive quarters of negative growth (real GDP quarter-on-quarter), this means that South Africa has experienced eight economic recessions since 1961, the longest occurring in 1991–1992, mainly as result of a global economic downturn. In 2008–2009 there was a recession over three quarters when the country became caught up in the global financial crisis.
In the first quarter of 2017, both the secondary and tertiary sectors recorded negative growth rates. The trade and manufacturing industries were the major heavyweights that stifled production, with trade falling by 5,9% and manufacturing by 3,7%.
On the positive side, the agriculture and mining industries both contributed positively to growth in the first quarter, but not enough to avoid recession.
Trade experienced production falls across the board, particularly in catering and accommodation and wholesale trade. Manufacturing found itself hamstrung by lower production levels in seven of its 10 divisions, most notably petroleum and chemical products (accounting for over 20% of the manufacturing industry). It was the third consecutive quarter of decline in total manufacturing.
Possibly the most important aspect the first quarter’s results is the tertiary sector. The sector – comprising finance, transport, trade, government and personal services – recorded its first quarter of decline since the second quarter of 2009, when South Africa was in a recession as well.
Some comfort, however, can be drawn from agriculture: this is the first time since the fourth quarter of 2014 that the industry has shown any growth. A jump in production in field crops and horticultural products lifted the industry in the first quarter. This might be one of the first signs of recovery from one of the toughest droughts in recent history.
Mining’s growth was mainly a result of a rise in production of gold and ‘other’ metal ores, including platinum.
Download the complete publication here.