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South Africa: Economy decelerates in Q1

May 26, 2015

In the first quarter, the economy expanded 1.3% over the previous quarter at a seasonally adjusted annualized rate (SAAR). The reading came in well below the 4.1% expansion observed in the fourth quarter of last year; and it undershot the 1.7% increase the market had expected. However, in annual terms, GDP expanded 2.1%, which came in above the 1.3% expansion recorded in the fourth quarter.

Q1’s slowdown came on the back of a deceleration in mining and quarrying, which expanded 10.2% (Q4: +15.2% quarter-on-quarter SAAR). In addition, manufacturing swung from a 9.5% expansion seen in Q4 to a 2.4% contraction in Q1. The construction sector also decelerated over the previous quarter as it expanded 0.8% (Q4: +3.5% qoq SAAR). Conversely, the electricity and water sector performed better in Q1 as it grew 0.7%, which was a slight improvement over the 0.3% expansion seen in the previous quarter.

Against the backdrop of a weak economy, in delivering the budget for 2015, the government revised downward its growth forecast. The government lowered its GDP forecast for this year to 2.0% from 2.5% previously forecasted. For next year, the government expects growth of 2.4%. The Central Bank expects the economy to expand 2.8% in 2015. FocusEconomics panelists project the economy to grow 1.5% in 2015, which is down 0.2 percentage points from last month’s estimate. For 2016, panelists expect the economy to grow 2.5%.


Author:, Senior Economist

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SouthAfrica GDP Q115

Note: Year-on-year changes of GDP in %
Source: Statistics South Africa (Stat SA) and FocusEconomics Consensus Forecast.


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