SA narrowly misses a recession

2014-08-26 13:39

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South Africa’s gross domestic product increased by a paltry 1% in the second quarter of this year, compared with the same time last year.

That is the lowest year-on-year growth rate since 2009, when South Africa technically experienced a recession.

It is also significantly worse than the first quarter’s 1.6%, which had been the worst economic performance since the recession.

On a seasonally adjusted basis though, the GDP growth in the three months to the end of June was 0.6%, compared with the first quarter’s -0.6%.

If it had been a negative number, the country would have officially been in a recession again.

Statistics South Africa released the new GDP numbers today, showing that government and the parastatal-heavy “transport, storage and communication” sectors kept the economy afloat.

The year-on-year growth of 1% was underpinned by 2.5% increase in the transport sectors and a 1.5% increase in the “general government services” sector.

On the other hand, the mining sector’s output dropped by 2.7% and manufacturing also fell. This happened well before the strike by the National Union of Metalworkers of South Africa in the metals and engineering industry started in July.

According to Stats SA, the financial sector is the largest in our economy – it contributes about 21.2% of GDP.

The government is second at 17.2%, followed by wholesale and retail (including catering and hospitality), which contributes 16.1%.

Manufacturing, which is rapidly shrinking as a foundation of the economy, constitutes 11.1% of GDP compared with as much as 16.8% in 2008, before the economic crisis.

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