South African GDP Unexpectedly Shrinks 0.3% in Q4


The South African economy contracted an annualized 0.3 percent on quarter in the three months to December of 2016, compared to an upwardly revised 0.4 percent growth in the previous quarter and missing market consensus of a 0.5 percent expansion. It was the first contraction since the March quarter of 2016 driven by mining and quarrying and manufacturing industries.

The largest negative contributor was the mining and quarrying industry, which decreased by 11.5 percent and contributed -0.9 percentage point. This was largely the result of lower production in coal, gold and 'other' metal ores (including platinum). Manufacturing decreased by 3.1 percent  mainly due to lower production in the manufacturing of food and beverages, petroleum, chemical products, rubber and plastic products and motor vehicles, parts, accessories and other transport equipment. The agriculture, forestry and fishing industry declined by 0.1 percent. It marks the eighth consecutive quarter of contraction due to severe droughts and falling production of horticulture products.

In contrast, trade, catering and accommodation went up 2.1 percent and finance, real estate and business services rose by 1.6 percent and each contributed 0.3 of a percentage point to growth. Increased activity was reported for financial intermediation, auxiliary activities and real estate services. The transport, storage and communication industry expanded 2.6 percent and contributed 0.2 of a percentage point, driven by land freight transportation and communications services. In addition, general government services grew by 0.9 percent and personal services rose 1 percent. The electricity, gas and water industry grew by 2.4 percent, largely due to an increase in electricity consumed in the fourth quarter. The amount of water distributed decreased, mainly driven by continued dry conditions and water restrictions in most parts of the country.

Year-on-year, the economy grew by 0.7 percent, the same as in the previous three months and above market expectations of 0.6 percent growth.

Considering full 2016, the GDP advanced 0.3 percent slowing from a 1.3 percent expansion in 2015. Growth was mainly driven by finance, real estate and business services (1.9 percent compared to 2.8 percent in 2015); general government services (1.4 percent compared to 0.8 percent in 2015) and wholesale, retail and motor trade; catering and accommodation industry (1.2 percent compared to 1.4 percent in 2015). Both manufacturing and construction increased 0.7 percent each (-0.2 percent and +1.7 percent respectively in 2015). In contrast, the mining sector slumped 4.7 percent (+3.9 percent in 2015) and agriculture shrank 7.8 percent (-6.1 percent in 2015).

Statistics South Africa | Deborah Neves | deborah.neves@tradingeconomics.com
3/7/2017 12:58:54 PM