South Africa’s GDP decreased by 0.3% in the third quarter, following an increase of 0.3% in the second quarter.

The agriculture, forestry and fishing industry decreased by 28.8%, contributing -0.7 of a percentage point to the negative GDP growth. This was primarily owing to decreased economic activities reported for field crops.

The transport, storage and communication industry decreased by 1.6%, contributing -0.1 of a percentage point. Decreased economic activities were reported for land transport and transport support services.

The trade, catering and accommodation industry decreased by 0.4%. Decreased economic activities were reported for wholesale trade, motor trade and food and beverages.

General government services decreased by 0.1%, mainly owing to decreased employment in national and provincial government and extra-budgetary institutions.

The finance, real estate and business services industry increased by 1.3%, contributing 0.3 of a percentage point. Increased economic activities were reported for financial intermediation, insurance and pension funding, auxiliary activities, real estate activities and other business services.

The personal services industry increased by 0.5%, contributing 0.1 of a percentage point. Increased economic activities were reported for health and education.

The manufacturing industry increased by 0.5%, contributing 0.1 of a percentage point. Three of the ten manufacturing divisions reported positive growth rates. The largest positive contribution was reported for the basic iron and steel, non-ferrous metal products, metal products and machinery division.

The mining and quarrying industry increased by 1.2%, contributing 0.1 of a percentage point. Increased economic activities were reported for manganese and chromium ore.

Industry body AgriSA noted the agriculture sector's negative contribution to GDP figures for the third quarter.

“At this stage, the data calls for further analysis but we are aware that drought plagued the production of field crops such as maize, soya beans, wheat and sunflower. Adverse weather conditions also hindered the production of subtropical fruits, deciduous fruits and vegetables in parts of the country," says AgriSA chief economist Kulani Siweya.

"It is vital that we enhance logistical efficiency, retain our current markets and explore new export opportunities, particularly within BRICS+ countries. We believe that, with the right policies and support, South African agriculture can lead in driving inclusive growth and job creation," he adds.

AgriSA emphasises the importance of fostering a stable and conducive environment for agriculture to thrive, driving market-oriented growth and creating inclusive opportunities across the sector.

North West University Business School economist Professor Raymond Parsons says the unexpected and disappointing GDP growth figures for the third quarter confirm the extent to which South Africa’s growth prospects remain vulnerable to negative factors such as adverse weather conditions, weakened exports and other lagging sectors.

"The negative economic and other factors in [the third quarter] have clearly outweighed the positive ones. To the extent that tough climatic circumstances have made agriculture the largest negative contributor to lower growth, there is potential for a future turnaround if weather conditions improve sooner-rather-than later.

"South Africa’s economic recovery is evidently slow and uneven. Looking at the bigger picture, these negative growth trends therefore confirm why the Government of National Unity policy of seeking higher, inclusive, job-rich growth must remain the overriding priority.

"In particular, much higher levels of total fixed investment are needed," he comments.

Financial services provider Nedbank, meanwhile, says the GDP figures suggest the economy is not entirely out of the woods yet.

"We still expect the economy to recover in [the fourth quarter] before strengthening and broadening throughout 2025. The boost will likely come from continued improvements in consumer demand as inflation remains subdued and interest rates start to decline more meaningfully, bolstering real incomes and lowering borrowing costs.

"An added boost could also come from households' access to contractional savings enabled by the two-pot retirement system. However, slower government spending, a modest fixed investment recovery, and the persistent drag from net exports will likely contain the boost from more robust consumer spending to GDP over the fourth quarter. Altogether, we forecast GDP growth of around 0.5% in 2024 and 1.5% in 2025," Nedbank comments.

EXPENDITURE ON GDP
Expenditure on real GDP decreased by 0.2% in the third quarter, following an increase of 0.4% in the second quarter.

Household final consumption expenditure (HFCE) increased by 0.5%, contributing 0.3 of a percentage point to the total negative growth. The highest growth rates were reported for non-durable and semi-durable goods.   

The main positive contributors to the increase in HFCE were expenditures on food and non-alcoholic beverages (0.9% and contributing 0.1 of a percentage point), housing, water, electricity, gas and other fuels (0.6% and contributing 0.1 of a percentage point), recreation and culture (1.2% and contributing 0.1 of a percentage point) and restaurants and hotels (1.1% and contributing 0.1 of a percentage point).

Final consumption expenditure by general government decreased by 0.5%, contributing -0.1 of a percentage point. This was mainly driven by decreases in purchases of goods and services and compensation of employees.

Gross fixed capital formation increased by 0.3%. The main positive contributors to the increase were other assets (4.4% and contributing 0.5 of a percentage point), construction works (1.4% and contributing 0.2 of a percentage point) and machinery and other equipment (0.5% and contributing 0.2 of a percentage point).

There was a R6.6-billion drawdown of inventories (seasonally adjusted and annualised value). Large decreases in three industries, namely manufacturing; electricity, gas and water; and mining and quarrying, contributed to the inventory drawdown.

Net exports contributed positively to expenditure on GDP. Exports of goods and services decreased by 3.7%, largely influenced by decreased trade in pearls, precious and semi-precious stones and precious metals; vehicles and transport equipment excluding large aircraft; chemical products; base metals and articles of base metals; and machinery and electrical equipment.

Imports of goods and services decreased by 3.9%, largely influenced by decreased trade in vehicles and transport equipment excluding large aircraft; mineral products; vegetable products; and base metals and articles of base metals.