Johannesburg – South Africa’s economy grew slightly in the first three months of the year, shooing away fears of recession hanging over Africa’s most industrialised country, official data showed on Tuesday.
The gross domestic product (GDP) increased by 0.4% between January and March after shrinking by 1.1% in the final three months of 2022, the national statistics agency said.
The growth came despite crippling power cuts that continue to hit economic activity – and beat many analysts’ expectations.
“The manufacturing and finance industries were the major drivers of growth on the supply side of the economy,” StatsSA said in a statement.
“The demand side was lifted by exports, with smaller positive contributions for household, government, and investment spending.”
Economists at South African bank FNB said last week they expected a “mild recession”, while others predicted growth to stagnate at around zero percent.
South Africa has been battered by record blackouts over the past year, as problems at beleaguered power utility Eskom have mounted.
The outages are costing more than $50-million in lost output each day, according to estimates by the energy minister.
Exports increased by 4,1% in Q1:2023. The rise in Q1: 2023 was largely influenced by increased trade in metals; vegetable products; prepared foodstuffs, beverages & tobacco; and machinery & electrical equipment.
Read more here: https://t.co/1h76jkke67#StatsSA #economy #GDP pic.twitter.com/4quPBMI00s
— Stats SA (@StatsSA) June 6, 2023
GDP has been swinging like a pendulum.
It recorded a 0.8% contraction in the second quarter of 2022, followed by a 1.8% expansion in the following quarter – before diving back in the last three months of the year, according to revised data.
High inflation and a weakening currency have compounded the lacklustre performance.
Inflation dropped to the lowest level in almost a year in April, slowing to 6.8% from 7.1% in March.
But in May the central bank still raised its main interest rate by 0.5 percentage points to 8.25% — a 14-year high.
It forecast GDP would grow by 0.3% in 2023, followed by 1.0% and 1.1% increases in 2024 and 2025 respectively.
Power cuts alone would cost the economy two percentage points this year, it estimated.
State-owned freight logistics group Transnet has also experienced maintenance troubles and other issues that have hampered exports.
Nevertheless, eight out of 10 industries recorded growth in the first three months of the year, with only the agriculture and the electricity, gas and water sectors slumping, according to StatsSA.
Mining activity turned positive after “a disappointing end to 2022”, and the trade industry also registered upward growth, the agency said.
Follow African Insider on Facebook, Twitter and Instagram
Source: AFP
Picture: Pexels
For more African news, visit Africaninsider.com
