Fri. Jul 19th, 2019

SA economy nosedives, GDP drops by 3.2%: Here’s what caused the slump

GDP economy south africaYikes. A sluggish start to the year has raised eyebrows across South Africa, as the economy suffers its worst quarterly GDP performance in 10 years.

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File this one under “shocker” – South Africa’s GDP has taken a sharp turn for the worst on Tuesday after it was revealed that the country’s economy had shrunk by 3.2% in the first quarter of 2019.

South African GDP latest – what has caused the downturn?

It’s the worst performing quarter seen in Mzansi since 2009 when a record low of -6.1% was clocked. The post mortem inquiry will begin immediately following the release from StatsSA, and it’d be hard to look past the country’s SOEs, as well as the eye-opening slump in manufacturing and marketing.

The secondary sector took an absolutely pummeling, as construction also joined the aforementioned bloodbath in its sister industries. All three of them combined are down 7.4% at the start of the new year.

Industries under pressure

Sadly, the forecast dip was around the 1.7% mark. South Africa has managed to almost double the negative prediction. The year-on-year growth – from this point in 2018 – is also a cause for concern, standing at 0%. Although we haven’t gone backwards, the economy is almost certainly stagnating.

The agriculture industry was absolutely savaged, losing 13% of its output in the first three months of the year. Electricity, transport and trade all saw losses in productivity between 3.5% – 7%.

Crumbs of comfort for the economy

Personal services and financial portfolios were two of only three industries that kept their heads above water, both registering growth of 1.1% over the three-month window. Government business logged the best performance, up by 1.2% in 2019’s first quarter.

GDP shocker: Consumers feel the pinch

The downward spiral was also reflected by household spending data: South Africans aren’t putting as much into the economy, which is down 0.8% on the final quarter of 2018. Despite spending more on alcohol, food and restaurants, consumers have avoided buying new clothes (down 12.7%) and skimped on transport costs (down 3.1%).

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