{"id":827646,"date":"2025-06-10T15:15:57","date_gmt":"2025-06-10T13:15:57","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=827646"},"modified":"2025-06-10T15:16:37","modified_gmt":"2025-06-10T13:16:37","slug":"big-trouble-for-south-africas-economy-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/827646\/big-trouble-for-south-africas-economy-2\/","title":{"rendered":"Big trouble for South Africa’s economy"},"content":{"rendered":"\n

Following stagnant growth in the year’s first quarter, manufacturing data published on Tuesday (10 June) paints a bleak picture for South Africa’s economic performance in Q2.<\/p>\n\n\n\n

Data published by Stats SA showed that manufacturing production in South Africa fell by a notable 6.3% year-on-year at the beginning of the second quarter (April), following a revised 1.2% decrease for March.<\/p>\n\n\n\n

The outcome was weaker than economists’ expectations of a 4.5% decline.<\/p>\n\n\n\n

The decline marks the sixth consecutive month of contraction in the section year-on-year, despite a month-on-month lift of 1.9%.<\/p>\n\n\n\n

The last time the sector showed growth y\/y was in October 2024, where it grew a revised 1.9%.<\/p>\n\n\n\n

On a three-month basis, however, the data shows a sector in deep recession.<\/p>\n\n\n\n

According to Investec economist Lara Hodes, the decline in April 2025 was broad-based, with all sectors except the glass and non-metallic mineral products group declining year-on-year.<\/p>\n\n\n\n

The food and beverages category and the basic iron and steel, non-ferrous metal products, metal products and machinery sector were the largest negative contributors. <\/p>\n\n\n\n

Specifically, they fell by 7.6% y\/y and 6.3% y\/y, respectively and detracted a combined 3.2 percentage points from the headline reading.<\/p>\n\n\n\n

“Within the food and beverages segment, the beverages and other foods sub-categories were largely responsible for the notable decline,” Hodes said.<\/p>\n\n\n\n

Additionally, the motor vehicles, parts and accessories and other transport equipment grouping and the petroleum, chemical products, rubber and plastic products segment sliced a further 2.2 percentage points off the topline outcome.<\/p>\n\n\n\n

Hodes noted that the manufacturing sector\u2019s lacklustre outcome is in line with the performance of the Absa Purchasing Managers Index, which also moved further into contractionary territory in April.<\/p>\n\n\n\n

This reflected both business activity and new sales order indices declining.<\/p>\n\n\n\n

The new sales orders index decreased by a marked 12.8 points to a subdued 36.1, underpinned by a slump in both demand conditions domestically and export sales. <\/p>\n\n\n\n

The index tracking export sales returned to contractionary levels, according to the BER.<\/p>\n\n\n\n

South Africa’s growth in serious trouble<\/h2>\n\n\n\n
\"\"<\/a>
Investec Economist, Lara Hodes<\/figcaption><\/figure>\n\n\n\n

Hodes said that the data does not bode well for South Africa’s second quarter GDP output, with advance indications provided by May\u2019s PMI release show that manufacturing sector conditions remained subdued.<\/p>\n\n\n\n

This indicates that the manufacturing sector is likely to underperform Q2 data, which will follow a dismal performance in the first quarter data, where it detracted from the overall GDP reading.<\/p>\n\n\n\n

GDP for the first quarter of the year scraped by with a 0.1% increase, largely thanks to the country’s agriculture sector, which outperformed.<\/p>\n\n\n\n

However, while the country showed marginal growth, celebrated by the national government, the outlook for the rest of the year has only become more bearish.<\/p>\n\n\n\n

After starting 2025 looking ahead to 2% GDP growth, early shocks thanks to the US-led trade and tariff war quickly undercut global growth prospects, including for South Africa.<\/p>\n\n\n\n

While the tensions have eased, uncertainty is rooted in forecasts, and the 2% GDP growth for South Africa was very quickly slashed to around 1.5%.<\/p>\n\n\n\n

Given the underperformance of the economy, most projections, including that of the International Monetary Fund, have cut this even further to 1%.<\/p>\n\n\n\n

More pessimistic economists have said that even 1% growth would be a miracle, given the slow pace of economic reforms and the government’s tendency to mismanage economic and foreign policy.<\/p>\n\n\n\n

This adds to the last decade of economic stagnation, where South Africa has only managed to eke out average growth of 0.7% a year, according to the OECD.<\/p>\n\n\n\n

For context, the country needs growth to move past 3% to turn its economic fortunes around and sustainably grow jobs and opportunities for the millions of South Africans without work.<\/p>\n","protected":false},"excerpt":{"rendered":"

Following stagnant growth in the first quarter of the year, the latest manufacturing data paints a bleak picture for South Africa’s economic performance in Q2.<\/p>\n","protected":false},"author":10,"featured_media":776889,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[1498,20029,3387,1809],"class_list":["post-827646","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-investec","tag-lara-hodes","tag-manufacturing","tag-stats-sa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/827646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=827646"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/827646\/revisions"}],"predecessor-version":[{"id":827653,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/827646\/revisions\/827653"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/776889"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=827646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=827646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=827646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}