GDP in South Africa

South Africa GDP

GDP bounces back in Q1

GDP rebounded in Q1, expanding 0.4% on a seasonally adjusted quarter-on-quarter basis, contrasting the 1.1% contraction logged in the fourth quarter of last year. The improvement was mainly driven by public spending.

Looking at the details of the release, government spending rebounded, growing 1.2% in Q1 (Q4 2022: -0.7% s.a. qoq). That said, household spending increased 0.4% in the first quarter, which was below the fourth quarter’s 0.7% expansion, while fixed investment growth edged down to 1.4% in Q1 from 1.5% in the previous quarter.

On the external front, exports of goods and services bounced back, growing 4.1% in Q1 (Q4 2022: -3.2% s.a. qoq), amid increased trade in base metals and machinery and electrical equipment. Imports of goods and services also rebounded, growing 4.4% in Q1 (Q4 2022: -0.8% s.a. qoq).

On an annual basis, economic growth moderated to 0.2% in Q1, following the previous quarter’s 0.8% increase. Q1’s performance marked the worst reading since Q1 2021.

Commenting on South Africa’s outlook, analysts at EIU, declared

“We expect real GDP growth to slump to 0.5% in 2023, reflecting a sharp slowdown in the global economy—particularly in the U.S. and Europe—alongside serious domestic constraints, topped by sustained electricity shortages, which are disrupting business operations on a daily basis.”