Shock as SA's economy shrinks in Q3
Shock as SA's economy shrinks in Q3Helena Wasserman - The South African economy unexpectedly contracted by 0.3% from the second to the third quarter this year.
Economists polled by Reuters expected growth of 0.5%.
In the third quarter, the economy was only 0.3% larger than a year before.
The main problem was agriculture, which shrank by almost 30% in the quarter.
"The industry experienced a rough quarter," Statistics SA noted.
"Drought plagued the production of field crops such as maize, soya beans, wheat and sunflower. Adverse weather conditions also hindered the production of subtropical fruits, deciduous fruits and vegetables in parts of the country."
Excluding the agricultural sector, the economy would have expanded by 0.4%, Bloomberg reports.
Other sectors
But there was also a slowdown in transport services, trade (due in part to weak vehicle sales and slow business at restaurants and fast-food outlets) and government spending.
Lower employment numbers in the civil service also dragged on economic growth, Stats SA noted.
In addition, exports fell by almost 4% - the biggest decline in three years.
Exports and imports of passenger vehicles were down, while there was weaker trade in precious metals.
However, finance - SA's biggest economic sector - grew.
Households
Also, there were hopeful signs in other sectors.
"Stronger manganese and chromium ore production helped boost mining. Iron, steel and machinery production drove much of the upward momentum in manufacturing," Stats SA said.
The construction sector grew by 1.1% - the biggest increase in two years, it noted.
It added that households increased their spending, with the recreation and culture sector seeing the highest growth rate ( 1.2%).
"Closer exploration of this category shows gambling as a notable contributor to this increase."
Stats SA noted that the South African National Gambling Board reported a 26% increase in gross gambling revenue to R59.3 billion in 2023/24, following a 37% surge in the previous year.
The shock contraction in GDP will add to pressure on the SA Reserve Bank, which has only cut rates by 50 basis points this year - far less than many other countries. - Fin24