The South African economy grew by 1.1% in the first quarter of 2021, translating into an annualised growth rate of 4.6%, data published by Stats SA on Tuesday (8 June) shows.
As part of the report, Stats SA measures the expenditure side of GDP, providing an indication of total demand in the economy.
This includes measures of household spending, government spending, investment spending, and net exports.
The data shows that household final consumption expenditure increased at an annualised rate of 4.7% in the first quarter – driven largely by miscellaneous goods and services, clothing and footwear, and furnishings.
The highest growth rates were seen in durable and semi-durable goods, and the largest contributors to growth were expenditures on durable goods and services.
Notable items in the ‘miscellaneous goods & services’ category that recorded growth include insurance-related products, as well as retail goods such as electrical appliances, jewellery and other personal effects.
Clothing and footwear expenditure increased at an annualised rate of 22.2%. Changes in inventories, particularly in the mining and trade industries, also spurred growth on the expenditure side of the economy, Stats SA said.
“It is promising to see household expenditure up 4.7% which is above the long-term average and indicates that households are slowly getting back on their feet after the financial repercussions of the pandemic,” said Maarten Ackerman, chief economist at Citadel.
“The data indicates that the majority of money is being spent on clothing, footwear, furniture, services, etc; however there has been a decline in spending at restaurants and hotels.
“This is to be expected in comparison with the high base of Q4 2020 when the hospitality industry reopened.”
Ackerman said that the massive increase of 20% in durable goods expenditure shows that consumers are feeling more confident about the future as one would not tuck into durable goods if one was concerned about the interest rate or job security.
Eight of the 10 industries tracked by Stats SA 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 and business services industry increased at an annualised rate of 7.4%.
This was mostly driven by property services, which recorded a rise in mortgage advances and bond registrations, and the banking sector which registered a rise in the number of credit extensions
“The mining industry had a positive quarter too with annualised growth of 18.1%, boosted by the production of platinum group metals, iron ore, gold and chromium,” StatsSA said.
“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.
This meant that retailers enjoyed a positive quarter, led by increases in sales of grocery products, healthcare services, vitamins and drugs.
Load shedding and a decline in the supply of water contributed to the contraction in the electricity, gas and water supply industry.
These numbers may be promising but one must consider that the local economy had somewhat flat-lined three years prior to Covid-19 – and the population continued to grow, said Ackerman.
“South Africa experienced a significant drop in Q2 2020 due to the economic ramifications of lockdown and is now recovering at a steady rate.
“If this continues, South Africa may reach pre-Covid levels by the end of the year – but this is not enough considering how stagnant the economy was prior to then. South Africa needs to grow at a rate of over 2.5% to thrive.”