South Africa’s Gross Domestic Product (GDP) slowed to 1.3% in the first quarter of 2015, Statistics South Africa (Stats SA) said on Tuesday.
“The seasonally adjusted real GDP at market prices for the first quarter of 2015 increased by an annualised rate of 1.3%,” said Statistician General, Pali Lehohla.
This was down from a 4.1% increase in the fourth quarter of 2014. The main contributors to the increase in economic activity for the first quarter of 2015 were the mining and quarrying industry (which contributed 0.8% based on growth of 10.2%,) finance, real estate and business services (which contributed 0.7% based on growth of 3.8%.)
According to Stats SA, the positive growth in mining and quarrying was due to higher production in the mining of coal and mining of “other” metal ores including platinum while the growth in finance, real estate and business services was due to increased activities in banking from financial intermediation services and equity, bond and other financial markets in auxiliary activities.
The wholesale, retail and motor trade, catering and accommodation industry also contributed to economic activity at 0.2% based on growth of 1.2%.
Meanwhile, the growth in the wholesale, retail and motor trade, catering and accommodation industry was due to an increase in turnover in the wholesale and retail trade divisions.
However, negative contributions were recorded by the agriculture, forestry and fishing industry (-0.4%) and the manufacturing industry (-0.3%.) Economic activity in the manufacturing industry reflected negative growth of 2.4% due to a lower production in the following divisions: petroleum, chemical products, rubber and plastic products and wood and wood products, among others.
The unadjusted real GDP at market prices increased by 2.1% during the first quarter of 2015 (year-on-year.) Nominal GDP was estimated at R965 billion for the first quarter of 2015, R14 billion less than the fourth quarter. Economic growth slowed more than what the markets anticipated with the market anticipating growth on average of 1.6%.
“When compared with the same quarter a year ago, the economy fared better (expanding by 2.1% from the fourth quarter's 1.3%), but this mainly reflects the impact of last year's strike-inflicted base,” said Nedbank economists.
According to Nedbank economists, the economy is still expected to grow by a subdued 2.2% in 2015 as a whole. This is helped by moderately firmer retail activity and some recovery in mining off last year’s low base. However, the upside will be contained by load shedding, lower international commodity prices and subdued global demand, said the analysts.
“Today's GDP figures are consistent with the Reserve Bank's general assessment of the economy, reflecting little underlying momentum, with considerable downside risks emanating from the country's electricity woes, other structural constraints and policy uncertainties,” said the economists.