The one province that has officially exited a recession in South Africa

The Eastern Cape has officially emerged from a recession, marking a significant milestone in the second quarter of 2024.

This recovery was driven by growth across several industries, notably electricity, manufacturing, trade, and construction, reflecting renewed momentum in the provincial economy.

According to the Eastern Cape Socio-Economic Consultative Council (ECSECC), South Africa’s overall economy grew by 0.4% during this period, following a stagnant 0.0% growth in the first quarter of 2024.

This national improvement coincided with the Eastern Cape’s modest recovery, which came after three consecutive quarters of contraction.

The province’s economy officially entered a recession in early 2024, with a GDP decline of 0.3% in the first quarter, preceded by contractions of 0.1% in the fourth quarter of 2023 and 0.3% in the third quarter of 2023.

It should be noted that the Eastern Cape Socio-Economic Consultative Council’s data for Q2 is the most recent data on the province’s performance.

Stats SA’s latest data on South Africa’s GDP for Q3 2024, which showed a nationwide 0.3% quarter-on-quarter decline, did not include province-specific data.

At the start of 2024, the Eastern Cape’s GDP at market prices had dropped from R368.8 billion in the last quarter of 2023 to R366.9 billion.

Comparatively, the province accounted for 7.9% of South Africa’s national GDP, lagging behind Gauteng (33.9%), KwaZulu-Natal (16.6%), and the Western Cape (14.2%).

Despite its smaller share, the province’s renewed growth offers hope for sustained economic progress in the months ahead.

The turning point came in the second quarter of 2024 when the Eastern Cape recorded a 0.1% GDP growth.

This recovery was spearheaded by gains in the electricity, manufacturing, and trade sectors.

Electricity emerged as a standout contributor, posting a 2.8% increase, followed by manufacturing at 1.2% and trade at 0.7%.

These sectors provided much-needed positive momentum after the prolonged period of economic contraction.

Government services, a key employer in the province, also contributed to the recovery, growing by 0.4% in the same period.

Nationally, South Africa’s real GDP reached its highest quarterly level in the second quarter of 2024, though it remained below the International Monetary Fund’s projected growth rate of 0.9% for the year.

A closer look at the national statistics revealed that seven industries expanded during the quarter, with finance, manufacturing, trade, and electricity, gas, and water making the largest contributions.

Finance led the way with a 1.3% growth, adding 0.3 percentage points to GDP, while trade and manufacturing increased by 1.2% and 1.1%, respectively, each contributing 0.1 percentage points.

However, the transport sector dragged down overall performance with a 2.2% decline, attributed to decreases in land transport and transport support services.

Provincially, growth patterns varied, with only the Free State and Northern Cape recording negative GDP growth of 0.1% each. Gauteng experienced the largest provincial increase at 0.8%, followed by the Western Cape at 0.5% and KwaZulu-Natal at 0.4%.

On a year-on-year basis, GDP growth declined across most provinces except Gauteng.

The Eastern Cape, along with the Northern Cape, Free State, and North West, saw a year-on-year decline of 0.6 percentage points, underscoring the challenges that persist despite recent progress.

Not all sectors fared equally well within the Eastern Cape.

While electricity, manufacturing, and trade powered the recovery, the transport and agriculture industries faced contractions of 2.7% and 2.3%, respectively.

These declines highlight ongoing vulnerabilities in critical areas of the provincial economy.

Nevertheless, the overall expansion in the second quarter offers a renewed sense of optimism for the Eastern Cape, marking a critical step forward after a prolonged economic downturn.

This recovery underscores the resilience of the Eastern Cape’s economy and the potential for further growth if the momentum in key industries can be sustained.

As South Africa continues to grapple with broader economic challenges, the Eastern Cape’s turnaround provides a valuable example of how targeted improvements in strategic sectors can drive regional recovery and contribute to national economic stability.

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