Stats SA has published the latest gross domestic product (GDP) data covering the first quarter of the year, showing that the economy grew by 1.1% in the first three months of 2021.
The growth follows a revised 1.4% rise in real GDP in the fourth quarter of 2020. On an annualised basis, the economy grew 4.6% quarter-on-quarter.
Following confusion caused by the annualisation of GDP data in 2020 – amid the Covid-19 pandemic and resulting lockdowns – Stats SA said it would no longer use the annualised data as the headline GDP statistic.
During periods of steady economic growth, annualising is a useful way of expressing quarter-on-quarter performance in annual terms, Stats SA said. However, during periods of economic instability, annualising can be misleading, because it exaggerates growth rates that are unlikely to be repeated.
The official number came in higher than projections from the South African Reserve Bank, which expected GDP growth of 2.7% (annualised) in the first quarter – a figure revised upwards from earlier predictions of 0.2%.
Stats SA noted that the finance, mining and trade industries were the main drivers of output on the production side of the economy, while household spending and changes in inventories helped spur growth on the expenditure side.
However, despite this being the third consecutive quarter of positive growth, the South African economy is still 2.7% smaller (-3.2% unadjusted) than it was in the first quarter of 2020, before the Covid-19 pandemic hit in earnest.
Eight of the 10 industries recorded positive gains in the first quarter of 2021, with finance, mining and trade making the most significant contributions.
Economic activity in the finance, real estate & business services industry increased, mostly driven by property services recording a rise in mortgage advances and bond registrations. The banking sector also registered a rise in the number of credit extensions.
The mining industry had a positive quarter too, boosted by the production of platinum group metals, iron ore, gold and chromium. On the downside, miners in manganese ore, coal and diamonds recorded lower production figures in the first quarter.
Strong wholesale and retail activity underpinned growth in the trade industry. Wholesalers recorded increases in sales of petroleum, as well as in consumer electronics (most notably digital appliances and high-end TVs). Retailers enjoyed a positive quarter, led by increases in sales of grocery products, healthcare services, vitamins and drugs.
Manufacturing output increased, driven by strong growth in the production of motor vehicles, parts and accessories and other transport equipment. Manufactures in wood, paper and printing made a notable contribution too, supported by strong demand for packing materials and increased newspaper sales.
Load shedding and a decline in the supply of water contributed to the contraction in the electricity, gas & water supply industry. The agriculture, forestry & fishing industry also performed poorly in the first quarter in comparison with the previous quarter, dragged lower by weaker production figures for field crops and animal products.