SA’s GDP records higher-than-expected 4.6% growth in first quarter

Risenga Maluleke. Image credit: Twitter/SA Gov News

South Africa’s gross domestic product (GDP) grew by an annualised rate of 4.6% in the first quarter of 2021 – a higher figure than most economists had predicted.

This is according to Statistics SA’s latest quarterly findings released on Tuesday (8 June).

Main drivers

Finance, real estate and business services were the main drivers, increasing at a rate of 7.4% while contributing 1.5 percentage points to GDP growth.

“The mining and quarrying industry increased at a rate of 18.1% and contributed 1.2 percentage points to GDP growth. Increased production was reported for platinum group metals (PGMs), iron ore and gold,” Statistician-General Risenga Maluleke said.

“The trade, catering and accommodation industry increased at a rate of 6.2%, contributing 0.8 of a percentage point to GDP growth. Increased economic activity was reported in wholesale trade and retail trade.”

Other industries that recorded increases are transport, storage and communication (4.8%), manufacturing (1.6%), and personal services (1.7%).

Contractions

The electricity, gas and water supply industry however contracted in the first quarter of 2021 compared to the last quarter of 2020, mainly because of load shedding and a decline in water supply.

The agriculture, forestry and fishing industry similarly performed poorly, dragged lower by weaker production of field crops and animal products.

A median estimate of 16 economists surveyed by Bloomberg had predicted a 3.2% annualised GDP growth rate. Stats SA’s figures therefore suggest that a bigger economic recovery is underway.

Risenga nevertheless said despite three consecutive quarters of positive growth, South Africa’s economy remains 2.7% smaller than in the first quarter of 2020.

The economy contracted by 7% in 2020 following several months of a COVID-19-induced hard lockdown.

Most estimates point to GDP growth of at least 3% this year, with the SA Reserve Bank revising its outlook from 3.8% to 4.2% recently.

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