SA enters recession after Q4 GDP falls 1.4%
JOHANNESBURG - South Africa has entered a technical recession after the economy contracted for a second consecutive quarter between October and December 2019 as all three sectors recorded negative growth during the period.
Statistics South Africa (StatsSA) revealed today that the seasonally adjusted fourth quarter gross domestic product (GDP) contracted by 1.4 percent quarter-on-quarter, following a revised 0.8 decline in the third quarter.
The economy shrank by 0.5 percent during the fourth quarter on a year-on-year basis.
The last time South Africa was in a recessionary territory was in the last half of 2018.
StatsSA said transport, wholesale, motor trade and accommodatiom were the biggest drags on growth.
The transport, storage and accommodation industry fell by 7.2 percent as decreased economic activity was reported for land and air transport, as well as transport support services.
The agriculture, forestry and fishing industry contracted by 7.6 percent mainly due to a fall in the production of field crops and horticultural products.
The construction industry also fell by 5.9 percent as decreases were reported for residential and non-residential buildings and construction works.
The electricity, gas and water industry contracted by 4 percent in the quarter largely due to decreases in electricity distributed and water consumption.
The manufacturing industry declined by 1.8 percent due to decreases in motor vehicles, parts and accessories and other transport equipment, wood and wood products, paper, publishing and printing.
General government services decreased by 0.4 percent due to lower employment numbers in national and provincial government and higher education system.
In contrast, finance, real estate and business services increased by 2.7 percent while mining and quarrying industry rose by 1.8 percent as platinum group metals, iron ore and gold saw increased production.
Household consumption expenditure rose by 1.4 percent in the fourth quarter as increases were recorded on clothing and footware, household furnishings and equipment, but increased by 1 for the year.
But final consumption expenditure by government declined by 0.2 percent as employment figures fell.
StatsSA said net exports contributed positively in expenditure on the GDP for the fourth quarter as exports of goods and services was up by 2.3 percent, largely influenced by increased trade in precious metals and stones.
Imports of goods and services declined by 8.5 percent due to decreases in imports of machinery and equipment, as well as vehicles and transport equipment.
StatsSA said for the year 2019 overall, South Africa's annual real grew by a mere 0.2 percent following a 0.8 percent in 2018.
The data agency said the 0.2 percent growth rate was led by increased economic activity in finance, real estate, and business services.
Expenditure on the GDP increased by 0.1 percent in 2019, decelarating from an increase of 0.7 percent in 2018.
BUSINESS REPORT ONLINE