South Africa’s economy expanded by 1.9% in the first three months of 2022, an uptick from the 1.2% growth in the fourth quarter (Q4) of 2021.
In its routine release of the country’s quarterly gross domestic product (GDP) figures on Tuesday, Statistics South Africa (Stats SA) reported that economic growth in the period recovered to pre-Covid-19 levels with real GDP valued at R4.61 billion, slightly higher than the R4.56 billion recorded in the first quarter of 2019.
The improved economic performance this period was led by growth in the manufacturing as well as the trade, catering and accommodation industries.
However, the construction and mining industries both registered contractions of 0.7% and 1.1% respectively.
GDP grew by 4.9% overall in 2021, marking a post Covid-19 recovery after the economy contracted by 6.4% in 2020.
With the country’s unemployment rate for Q1 2022 at 34.5% – slightly lower than that seen in Q4 2021 of 35.3% – there is more pressure on government to push for much higher levels of economic growth that will create more jobs.
Anchor Capital investment analyst Casey Delport says the reported decline in performance of the mining industry was unsurprising, adding that the sector’s future may continue looking grim come quarter two.
“This poor performance from the mining sector is largely unsurprising, given that mining output in Q1 2022 suffered interruptions from heavy rainfall and industrial action,” she says.
“Looking ahead to Q2 2022, the general economic outlook looks clouded due to the slowdown in economic activity in SA’s key trading partner countries due to the ongoing war in Ukraine, as well as lockdown restriction (although now easing) in China.”
New investment increases
The state of the country’s economy is further seen in the recorded rise in new investments during the reporting period.
“The main contributors to the increase were machinery and equipment (5.4% and contributing 2.2 percentage points), transport equipment (13.5% and contributing 1.2 percentage points) and ‘other’ assets (3.6% and contributing 0.4 of a percentage point),” Stats SA says in its release.
However, Stats SA did note that there was a R4 billion drawdown of inventories during the period. Contributing to these drawdowns was the decrease in trade and electricity.
Hammering down on growth
With Russia’s attack on Ukraine approaching its fourth month, consequent global supply chain disruptions resulting from the conflict has seen South Africans battling rapidly rising fuel prices, inflation and interest rates.
Recent consumer price index (CPI) figures from Stats SA revealed that annual inflation was 5.9% in April, a five-year high.
Further hammering the country’s growth capability is its energy supply challenges. South Africa has endured 28 days (about 673 hours) of load shedding this year alone.-moneyweb
