The South African economy has experienced a decline of 1.3% in the fourth quarter of 2022, surpassing the anticipated decrease of 0.4%. Various sectors including finance, trade, mining, agriculture, manufacturing, and general government services contributed to the decrease in gross domestic product (GDP). Notably, the finance, real estate & business services industry contracted by 2.3%, making it the largest negative contributor to GDP. The trade, catering & accommodation industry was the second-largest negative contributor, declining by 2.1%. The production of diamonds, iron ore, and platinum group metals (PGMs) led to lower mining output, while agriculture experienced the most significant contraction during the quarter.
While the transport, storage & communication, construction, and personal services sectors showed promise, the shocking GDP figures for the quarter have put South Africa on the brink of a technical recession. Economists predict similar outcomes for the first quarter of 2023, owing to the near-permanent load shedding that the country has experienced since September 2022. The Reserve Bank has slashed its growth projections for the year to a meager 0.3%, based on the assumption that the country will undergo 200 days of load shedding in 2023, with 66 days already experienced.
Stats SA has highlighted that the South African economy has remained stagnant since 2019, with the fourth quarter data concluding the calendar year results. Despite expanding by 2.0% between 2021 and 2022, annual growth figures fell short of expectations. The economy has grown by only 0.3% since the pre-pandemic reading of R4.58 trillion in 2019, lagging behind the 3.5% rise in the country’s population over the same period.
Six industries are yet to recover to their pre-pandemic levels of production, with construction bearing the brunt, remaining 23.1% smaller than before the pandemic. However, the South African agricultural industry has shown resilience in the face of the pandemic, recording positive growth for three years. The finance, real estate & business services industry has also displayed positive growth figures, albeit not as robust as agriculture.