South Africa Avoids Recession as Economy Shows Modest Growth in Q1
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Loading... - Jess Cameron
- 06 Jun 2023
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South Africa managed to steer clear of a recession as its economy experienced slight growth in the first quarter, according to the latest data released on Tuesday. Despite facing significant challenges from persistent power cuts, the manufacturing and finance sectors showed relative resilience, contributing to the overall positive performance.
In the first three months of 2023, Africa's most industrialized economy grew by 0.4% on a quarter-on-quarter basis, with a year-on-year growth of 0.2%. These growth rates align with the predictions made by economists in a Reuters poll.
Among the ten industries monitored by Stats SA, eight experienced growth during the first quarter. Notably, manufacturing and finance, along with real estate and business services, made the most significant positive contributions to the overall growth. On the other hand, agriculture, forestry, and fishing had a notable negative impact on the growth figures.
Risenga Maluleke, the Statistician-General, highlighted the strong performance of the food and drinks manufacturing sector. He attributed its success, in part, to its lower reliance on electricity compared to other manufacturing sectors. Maluleke further explained that household consumption, particularly in restaurants and hotels, played a significant role in driving growth. He emphasized that even during power cuts, people turned to services like Uber Eats or ordering from restaurants for their meals.
While South Africa managed to avoid a technical recession, typically defined as two consecutive quarters of decline in the gross domestic product (GDP), analysts remain pessimistic about the country's growth prospects. The ongoing power cuts, which can last up to ten hours per day, continue to pose challenges for businesses of all sizes. As a result, the central bank predicts a mere 0.3% growth for the economy in 2023.
In terms of specific sectors, manufacturing experienced a growth of 1.5% in the first quarter, while finance, real estate, and business services grew by 0.6%. On the other hand, agriculture, forestry, and fishing contracted by 12.3%, and the electricity, gas, and water sector saw a decline of 1.0%.
