South Africa’s Economy Springs Forward: Q1 2023 GDP Up by 0.4%

GDP
  • GDP Growth: South Africa’s Gross Domestic Product (GDP) increased by 0.4% in the first quarter of 2023, with significant contributions from the manufacturing and services sectors.
  • Sector Performance: The manufacturing industry, finance, real estate, and business services industry, and the personal services industry all reported growth. The transport, storage, and communication industry, as well as the trade, catering, and accommodation industry, also saw increases.
  • Expenditure and Trade: Expenditure on real GDP and household final consumption expenditure both increased by 0.4% in Q1 2023. However, net exports contributed negatively to growth in expenditure on GDP, with both exports and imports of goods and services seeing an increase.

South Africa’s Gross Domestic Product (GDP) has seen a 0.4% increase in the first quarter of 2023, according to the latest data released by the national statistical service. This growth has been driven by a variety of sectors, with the manufacturing industry leading the charge.

Manufacturing Industry Fuels Growth

The manufacturing industry has shown a significant increase of 1.5% in the first quarter, contributing 0.2 of a percentage point to the GDP growth. Four out of ten manufacturing divisions reported positive growth rates in the first quarter. The food and beverages division made the largest contribution to the increase, with the petroleum, chemical products, rubber, and plastic products division also making a significant contribution to the growth in this industry.

Services Sector Shows Promise

The finance, real estate, and business services industry also saw an increase of 0.6% in the first quarter, contributing 0.2 of a percentage point to GDP growth. Increased economic activities were reported for financial intermediation, insurance and pension funding, real estate, and business services. The personal services industry also increased by 0.8%, contributing 0.1 of a percentage point to GDP growth, with increased economic activity reported for community services.

Transport, Trade, and Accommodation Industries on the Rise

The transport, storage, and communication industry saw an increase of 1.1%, contributing 0.1 of a percentage point to GDP growth. Increased economic activities were reported for land transport, air transport, transport support services, and communication services. The trade, catering, and accommodation industry also saw an increase of 0.7% in the first quarter, contributing 0.1 of a percentage point to GDP growth. Increased economic activities were reported for wholesale trade, retail trade, and catering and accommodation.

Expenditure on GDP Increases

Expenditure on real GDP increased by 0.4% in the first quarter of 2023. Household final consumption expenditure (HFCE) increased by 0.4% in the first quarter, contributing 0.3 of a percentage point to total growth. Increases were reported for semi-durable and non-durable goods. The main positive contributors to the increase in HFCE were expenditures on restaurants and hotels, health, food and non-alcoholic beverages, transport, and clothing and footwear.

Government Consumption and Capital Formation

Final consumption expenditure by the general government increased by 1.2% in the first quarter, mainly driven by increases in goods and services and compensation of employees. Total gross fixed capital formation increased by 1.4% in the first quarter. The main positive contributors to the increase were other assets, machinery and other equipment, non-residential buildings, and residential buildings.

Inventory Build-up and Trade

There was a R35 billion build-up of inventories in the first quarter of 2023. Large increases in three industries, namely mining and quarrying, trade, catering and accommodation, and personal services, contributed to the inventory build-up. Net exports contributed negatively to growth in expenditure on GDP in the first quarter. Exports of goods and services increased by 4.1%, largely influenced by increased trade in base metals and articles of base metals; vegetable products; prepared foodstuffs, beverages and tobacco; and machinery and electrical equipment. Imports of goods and services increased by 4.4%, largely influenced by increased trade in machinery and equipment; chemical products; vehicles and transport equipment; and prepared foodstuffs, beverages, and tobacco.

Table 1: GDP Growth by Industry

IndustryQ1 2023 Growth (%)Contribution to GDP Growth (percentage points)
Manufacturing1.50.2
Finance, Real Estate, and Business Services0.60.2
Personal Services0.80.1
Transport, Storage, and Communication1.10.1
Trade, Catering, and Accommodation0.70.1
Caption: Table 1 shows the growth rates and contributions to GDP growth for various industries in Q1 2023.

Table 2: Expenditure on GDP

Expenditure CategoryQ1 2023 Growth (%)Contribution to Total Growth (percentage points)
Household Final Consumption Expenditure (HFCE)0.40.3
General Government Final Consumption Expenditure1.2
Gross Fixed Capital Formation1.4
Caption: Table 2 presents the growth rates and contributions to total growth for different expenditure categories in Q1 2023.

Table 3: Trade in Q1 2023

Trade CategoryQ1 2023 Growth (%)
Exports of Goods and Services4.1
Imports of Goods and Services4.4
Caption: Table 3 shows the growth rates for exports and imports of goods and services in Q1 2023.

The GDP estimates are preliminary and may be revised. For more detailed information, refer to the Stats SA website.

Note: The figures showing growth in expenditure on GDP exclude the residual, calculated as the difference between GDP measured by production and the sum of the expenditure components. For more detail see Table 31 on the Stats SA website. Given the sources used to estimate HFCE, spending by non-residents in South Africa needs to be deducted from HFCE. Hence, an increase in non-residents’ expenditure decreases the ‘other’ component of HFCE and makes a negative contribution to the HFCE growth rate.

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