South Africa’s GDP Stumbles: 0.3% Decline in Q3 2024 Shakes Economic Outlook

South Africa’s economy has hit a speed bump, with gross domestic product (GDP) shrinking by 0.3% in Q3 2024. This unexpected downturn follows a modest 0.3% growth in Q2 and falls significantly short of forecasts by Investec and Nedbank, which predicted a 0.5% growth.

Sectoral Weakness Drives the Decline

The largest drag on GDP came from the agriculture, forestry, and fishing sector, which plummeted by 28.8%. Stats SA attributed this to reduced field crop activities, costing the economy 0.7 percentage points.

The transport, storage, and communication sector also declined by 1.6%, while trade, catering, and accommodation fell by 0.4%. Decreased activities in land transport, motor trade, and wholesale contributed to the slump.

Bright Spots Amid Challenges

Despite the overall contraction, some sectors showed resilience.

• Finance, Real Estate, and Business Services: Up 1.3%, adding 0.3 percentage points to GDP.
• Mining and Quarrying: Increased by 1.2%, buoyed by activities in manganese and chromium ore production.
• Manufacturing: Rose by 0.5%, with three divisions reporting positive growth rates.

Expenditure Trends Reveal Mixed Signals

On the expenditure side, real GDP contracted by 0.2%, with household consumption rising by 0.5%. Spending on food, recreation, and housing led the increase.

However, government consumption fell by 0.5%, reflecting reduced employee compensation and purchases of goods and services.

Gross fixed capital formation grew by 0.3%, with notable contributions from construction works and machinery.

Trade Troubles Add to the Pressure

Exports and imports both declined, each dropping by 3.7% and 3.9%, respectively. Key export reductions included precious stones, vehicles, and chemical products, while imports of mineral products and base metals also weakened.

What’s Next for South Africa’s Economy?

This GDP contraction comes at a critical time, with policy adjustments and global economic headwinds likely to shape the path forward. While resilient sectors like finance and mining provide some optimism, the steep declines in agriculture and transport highlight structural challenges that need urgent attention.

For policymakers, addressing trade performance and boosting key industries will be vital in reversing the downturn and ensuring sustained economic growth in the quarters ahead.

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