SA economy deepens, as GDP shrink by 1.5%

South Africa’s Gross Domestic Product (GDP) decreased by 1.5% in the third quarter of 2021, Statistics South Africa (StatsSA) said on Tuesday.

During this period, the trade, catering and accommodation industry decreased by 5.5%, contributing -0.7 of a percentage point to GDP growth.

The statistics agency said decreased economic activities were reported for wholesale, retail and motor trade, and catering and accommodation services.

Statistician-General Risenga Maluleke said between July and September, the manufacturing industry decreased by 4.2% in the third quarter, contributing -0.5 of a percentage point to GDP growth.

“Eight of the ten manufacturing divisions reported negative growth rates in the third quarter. The motor vehicles, parts and accessories and other transport equipment division made the largest contribution to the decrease in the third quarter.

“The food and beverages division and basic iron and steel, non-ferrous metal products, metal products and machinery division also made noteworthy contributions to the contraction.

The agriculture, forestry and fishing industry decreased by 13.6% and contributed -0.4 of a percentage point to GDP growth,” he said.

The Statistician-General said the decrease was mainly due to decreased production of field crops and animal products.

Household final consumption expenditure (HFCE) decreased by 24% in the third quarter, contributing -1.6 percentage points to total growth.

Stats SA said the largest decreases were reported for expenditures on durable and non-durable goods.

The agency said expenditure on health, the ‘other’ category and education contributed positively to growth in HFCE.

Spending on life insurance services was the main contributor to the increase in the ‘other’ category in the third quarter. Final consumption expenditure by general government increased by 0.1% in the third quarter.

He said there was a R915 million drawdown of inventories in the third quarter of 2021, saying there were large decreases in manufacturing and trades, which contributed to the inventory drawdowns experienced in the quarter.

During this period, net exports contributed positively to growth in expenditure.

“Imports of goods and services decreased by 2.8%, driven largely by decreases in mineral products; base metals and articles of base metals; and prepared foodstuffs, beverages and tobacco,”  said Stats SA.