After growing by 3.1% in the fourth quarter of 2017, the South Africa economy wobbled in the first quarter of 2018, shrinking by 2.2% quarter-on-quarter, according to the latest data from Stats SA.
Agriculture, mining and manufacturing were the main contributors to the slowdown, with the electricity, construction and trade industries also recording negative growth, the group said.
The 2.2% fall is the largest quarter-on-quarter decline since the first quarter of 2009. In that quarter, the economy contracted by 6.1%.
The rand lost ground against the major currencies in midday trade on Tuesday:
- Dollar/Rand: R12.64 (0.60%)
- Pound/Rand: R16.90 (1.00%)
- Euro/Rand: R14.78 (0.59%)
After recording four consecutive quarters of robust growth in 2017, the agriculture industry lost ground in the first quarter of 2018, contracting by 24.2%, the largest quarter-on-quarter fall since the second quarter of 2006.
Agriculture’s relatively strong performance in 2017 is one of the positive factors that helped keep the economy afloat in 2017. This momentum failed to carry through to 2018, with decreased production in field crops and horticultural products contributing to the decline in the first quarter.
Mining entered into recession with its second consecutive quarter of economic decline.
According to Stats SA’s data, production was down 9.9% in the first quarter of 2018, following on from a decrease of 4.4% in the fourth quarter of 2017. Lower production in gold, platinum group metals and iron ore were the main contributors to falling performance.
Manufacturing also failed to make a positive contribution to economic growth, falling by 6.4%. The decline was driven largely by a fall in production of petroleum and chemical products, as well as basic iron and steel, Stats SA said.
“The trade, construction and electricity industries also recorded negative growth in the first quarter of 2018 compared with the fourth quarter of 2017. Trade activity fell by 3.1%, on the back of weaker wholesale, retail and motor trade sales and lower activity in catering and accommodation.
“The construction industry continued to contract, experiencing its fifth consecutive quarter of decline. The industry has lost R1.7 billion in value since the fourth quarter of 2016, falling from R110 billion to R108 billion in the first quarter of 2018 (constant 2010 prices, annualised),” the group said.
Economic activity in transport, finance, personal services and government increased in the first quarter of 2018. The 1.8% rise in general government was mostly related to increased employment numbers in the public sector, it said.