According to Stats SA, growth was dragged lower mainly by finance, trade, mining, agriculture, manufacturing and general government services.<\/p>\n
Seven of the ten industries contracted in the fourth quarter. The finance, real estate & business services industry shrank by 2.3%. This was on the back of lower economic activity in financial intermediation, insurance & pension funding and auxiliary activities.<\/p>\n
As the finance, real estate & business services industry is the largest in the South African economy, the 2.3% decrease was the biggest factor behind the decline in GDP, subtracting 0.6 of a percentage point from GDP growth.<\/p>\n
The trade, catering & accommodation industry was the second largest negative contributor to growth, recording a contraction of 2.1%. This was mainly due to a decline in wholesale trade, Stats SA said.<\/p>\n
Mining output was dragged lower by a decline in the production of diamonds, iron ore and platinum group metals (PGMs).<\/p>\n
Economic activity in the electricity, gas & water supply industry was hampered by lower levels of production and consumption of electricity – mainly due to load shedding – and water.<\/p>\n
Agriculture recorded the largest contraction in the quarter (-3.3%), pulled lower mainly by weaker production figures for field crops and horticulture products.<\/p>\n
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On the positive side, transport, storage & communication, construction and personal services were the bright spots in the fourth quarter.<\/p>\n
Transport, storage & communication made the largest positive impact, rising by 0.7% and contributing 0.1 of a percentage point to growth. This was mainly due to increased economic activity in passenger land transport, air transport and communication services.<\/p>\n
Recession warning<\/strong><\/p>\n The shock GDP numbers for the quarter place South Africa on the precipice of a technical recession, with economists anticipating similar numbers for the first quarter of 2023.<\/p>\n The third quarter was marred by near-permanent load shedding, which has been in effect since September 2022. Only two days – at the start and at the end of October 2022 – featured no load shedding, with the rest of the quarter moving between stage 2 and stage 6 load shedding.<\/p>\n Every single day of the year so far has featured load shedding, continuing the trend. The key difference, however, is that load shedding stages have been far higher, with stage 6 load shedding sticking around for much longer.<\/p>\n Economists have warned that this is likely to have a dire effect on the economy, with conservative growth estimates for Q1 2023 pointing to a 0.4% decline.<\/p>\n Load shedding is such a crushing issue for the economy that the Reserve Bank has cut its growth projections for the year to a paltry 0.3%. This is based on the assumption that the country will experience 200 days of load shedding this year.<\/p>\n To date, the country has already seen 66 days of outages.<\/p>\n Annual GDP<\/strong><\/p>\n Stats SA noted that economic growth in South Africa has been flat since 2019.<\/p>\n The fourth quarter data concludes the results for the calendar year, providing an opportunity to revisit the annual GDP series.<\/p>\n The South African economy grew for a second consecutive year, expanding by 2.0% between 2021 and 2022, from R4.50 trillion to R4.60 trillion. However, annual growth also undershot expectations – economists had pegged growth for the year at 2.3%.<\/p>\n Although GDP reached an all-time high in 2022, the economy has only grown by 0.3% from the 2019 pre-pandemic reading of R4.58 trillion. This lags behind the 3.5% rise in the country\u2019s population over the same period, Stats SA said.<\/p>\n Exploring the economy in more detail, six industries have yet to recover to their pre-pandemic levels of production.<\/p>\n Construction is the worst in shape, remaining 23.1% smaller than what it was before the pandemic. In fact, construction\u2019s woes started way before Covid-19. A shadow of its former self, 2022 marked construction\u2019s sixth consecutive year of economic decline, the stats body said.<\/p>\n On the upside, South African agricultural activity was robust in the face of the pandemic.<\/p>\n The industry grew strongly in 2020 while many other industries faltered, following up with further gains in 2021 and 2022. The finance, real estate & business services industry also recorded positive growth figures for all three years, although not as strong as agriculture.<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/03\/Flat-GDP.png\")
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