GDP falls by 2.0%

GDP falls by 2.0%

The South African Gross Domestic Product (GDP) decreased by 2.0% in the first quarter of 2020, Statistics SA has revealed.

Releasing the data on Tuesday, Stats SA said the contraction was due to decreases in several key sectors.

“The mining and quarrying industry decreased by 21.5% and contributed 1.7 percentage points to GDP growth. Decreased production was reported for iron ore, manganese ore, other metallic minerals and chromium,” the report reveals.

The manufacturing industry during this period contracted by 8.5%.

“Seven of the 10 manufacturing divisions reported negative growth rates in the first quarter. The divisions that made the largest contributions to the decrease were petroleum, chemical products, rubber and plastic products; basic iron and steel, non-ferrous metal products, metal products and machinery, and motor vehicles, parts and accessories and other transport equipment,” Stats SA said.

The electricity, gas and water industry contracted by 5.6% in the first quarter, largely due to decreases in electricity distribution and water consumption.

The construction industry decreased by 4.7%. Decreases were reported for residential buildings, non-residential buildings and construction works.

The agriculture, forestry and fishing industry increased by 27.8% and contributed 0.5 of a percentage point to GDP growth. The increase was mainly due to increases in the production of field crops, horticultural products and animal products.

Finance, real estate and business services increased by 3.7% in the first quarter. Increased economic activity was reported for financial intermediation, insurance and pension funding, auxiliary activities, and other business services.

General government services increased by 1.0%, mainly attributed to increased employment in provincial government and higher education institutions.

Expenditure on GDP

Expenditure on real GDP fell by 2.3% in the first quarter of 2020.

During this period, household final consumption expenditure increased by 0.7% in the first quarter, contributing 0.4 of a percentage point to total growth.

“The main positive contributors to growth in HFCE [household final consumption expenditure] were expenditure on food and non-alcoholic beverages (4.3% and contributing 0.8 of a percentage point), furnishings, household equipment, maintenance (3.2% and contributing 0.3 of a percentage point) and housing and utilities (1.7% and contributing 0.2 of a percentage point, respectively),” reads the report.

Expenditure on transport and clothing and footwear decreased and contributed negatively to growth in HFCE.

Final consumption expenditure by general government increased by 1.1%. Increases in employment and spending on goods and services were reported in the first quarter.

Gross fixed capital formation decreased by 20.5%. The main contributors to the decrease were machinery and other equipment, transport equipment and other assets. Weak imports of machinery and other equipment and transport equipment contributed to the decrease in gross fixed capital formation.

There was a R67.3 billion drawdown of inventories in the first quarter of 2020. Large decreases were reported for the mining, manufacturing and trade industries. –

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