South Africa’s economy rebounded strongly in the first quarter of 2023, escaping recession and reclaiming its pre-pandemic stature.
The latest data released by Statistics South Africa reveal that the nation’s gross domestic product (GDP) expanded 0.4% between January and March following a revised contraction of 1.1% in the previous quarter.
The report highlights that several sectors experienced growth, with manufacturing and finance leading the way.
Out of the 10 industries analysed, eight recorded positive growth during the first three months of the year. Manufacturing output increased 1.5%, with the production of food and beverages acting as the primary catalyst for the industry’s positive performance.
According to Statistics SA, finance, real estate, and business services also experienced a notable 0.6% growth, primarily driven by financial intermediation, insurance, pension funding, real estate and business services.
Additional sectors contributing to the overall economic expansion included personal services, transport, storage, and communication.
Rail freight and rail passenger transport witnessed an upswing, while air transport, transport support services, and communications also exhibited stronger economic activity.
Mining turned positive in the first quarter, led by increased production of platinum group metals and gold.
The trade industry also registered growth, driven by positive results in wholesale trade, retail trade, and catering and accommodation. However, the motor trade experienced a decrease in economic activity during the reporting period.
“After a disappointing end to 2022, mining activity turned positive in the first quarter. The rise in production was led by platinum group metals and gold,” reads the report.
“The trade industry also registered upward growth, with positive results from wholesale trade, retail trade and catering and accommodation. Motor trade was not as lucky, however, recording a decrease in economic activity.”
However, not all the sectors fared well, as electricity, gas and water and agriculture contracted in the first quarter.
Statistics SA said utilities recorded their fourth consecutive quarter of decline, primarily due to weaker electricity production and lower water consumption.
States the report: “Electricity, gas and water [utilities], and agriculture contracted in the first quarter. Electricity, gas and water registered its fourth consecutive quarter of decline, dampened by weaker electricity production and lower water consumption.
“The decline in utilities in the first quarter was an improvement from the decrease recorded in the previous quarter.
“Agriculture slumped by 12.3%, weighed down by a decline in the production of field crops and animal products. Agriculture was the largest negative contributor in the first quarter, subtracting 0.4 of a percentage point from GDP growth.”
On the expenditure side of GDP, the statistical service revealed that exports played a vital role in driving overall demand in the economy.
According to the report, exports expanded 4.1% during the first quarter, mainly fueled by increased trade in base metals, food products, and machinery and electrical equipment.
Gross fixed capital formation, particularly fueled by government investment, saw a rise, with households also increasing their spending on restaurants and hotels by 6.9%.
However, Statistics SA noted that imports also rose in the first quarter, primarily driven by increased trade in machinery and equipment, chemical products, vehicles and transport equipment, and prepared foodstuffs and beverages.
“After the sharp downturn in the second quarter of 2020, real GDP [constant 2015 prices] took two years to return to pre-pandemic levels.
“In the third quarter of 2022, real GDP reached an all-time high of R1 161-billion. Despite the 0.4% rise in the first quarter of 2023, GDP remains below this peak.”
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