South Africa dodges a bullet – barely

South Africa’s GDP increased by 0.1% quarter-on-quarter (qoq) in Q4 2023, with the country very narrowly avoiding a technical recession.

In Q3 2023, GDP shrunk by 0.2% qoq. Two consecutive quarters of retractions would see South Africa enter a technical recession.

Stats SA said that real GDP in Q4 was R1,158 billion – above the pre-Covid reading of R1,150 billion but below the peak of R1,161 billion in Q3 2022.

Six of the ten industries saw growth in Q4 2023, with Transport, storage and communication (expanding 2.9% and contributing 0.2 of a percentage point to the GDP growth) seeing the most growth.

Despite the heavyweights of iron ore and gold being down in the quarter, mining activity increased by 2.4% amid stronger production figures for platinum group metals, chromium ore, coal and diamonds.

Electricity, gas & water expanded by 2.3% – the second consecutive quarter of growth.

“The country experienced fewer days of load shedding in the fourth quarter (63 days) compared with the third quarter (91 days), with the rise in electricity production and consumption reflecting positively in the GDP numbers,” said Stats SA.

On the downside, agriculture, forestry & fishing had a notably tough quarter, shrinking by 9.7%, on the back of weaker production figures for field crops, horticulture products and animal products (most notably, slaughtered pigs, poultry and eggs).

Yearly growth

Across the whole year, the economy grew by 0.6% (in line with expectations from the Bureau for Economic Research) after expanding by 1.9% in 2022.

Despite being minimal, this growth was widely unexpected at the start of 2023 amid heightened load shedding.

Stats SA said that the finance, real estate and business services industry was the leading star in 2023, growing by 1.8% and contributing 0.4 of a percentage point to the GDP growth.

Construction expanded by 0.6% – the first yearly increase since 2016.

However, mining and electricity, gas and water were down for the second year in a row.

Agriculture recorded its first annual contraction since 2019, dropping by 12.2% – the largest annual fall in the sector since 1995 (-19.9%).

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