SA economy grew by 1.2% in the second quarter - stronger than expected

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Stats SA on Tuesday released second-quarter GDP figures.
Stats SA on Tuesday released second-quarter GDP figures.
Allan Baxter
  • The SA economy grew by 1.2% during the second quarter of 2021. This is a 19.3% increase from the previous year when the economy was hit by a hard lockdown.
  • The economy is still 1.4% smaller than it was before the pandemic, according to Stats SA.
  • A Bloomberg poll of economists had expected the economy to grow 0.9%.

The SA economy grew by 1.2% on a quarter-on-quarter, seasonally adjusted basis - during the second quarter of the year. The GDP number, released by Statistics SA on Tuesday,  was better than most economists expected. The median prediction of a Bloomberg poll of economists was growth of 0.9%.

On a year-on-year, unadjusted basis, second-quarter GDP increased 19.3%. The second quarter of last year was hit by a hard lockdown in South Africa.

The economy is still 1.4% smaller than it was before the pandemic, according to Stats SA.

Stats SA recently rebased and benchmarked the national accounts, which showed that the economy is 11% bigger than previously estimated in 2020. The second quarter GDP figures are based on the new estimates, and Stats SA also released revised figures for first quarter GDP which shows the economy grew 1% - not 1.1% as it previously reported.

The Bureau for Economic Research noted that given the revisions to GDP estimates and the absence of June mining production figures, it was more difficult to forecast for GDP. The Department of Mineral Resources was meant to submit source data on the industry to Stats SA for release on 12 August. Stats SA had to rely on estimates, using trade statistics from the South African Revenue Services, in order to calculate the second quarter GDP figures, Fin24 previously reported.

According to Stats SA, the mining and quarrying industry increased by 1.9% - helped by production of platinum group metals, gold and coal.

Mining was among six industries which recorded positive growth between the first and second quarter. The largest contributor to GDP growth was the transport, storage and communication industry - which increased 6.9% during the quarter. "Increased economic activity was reported for land transport and communication services," Stats SA said in a statement.

Other major contributors to GDP growth were the personal services industry which expanded 2.5% and the trade, catering and accommodation industry which grew 2.2%. "Increased economic activity was reported in wholesale, retail and motor trade, and there was increased spending on catering and accommodation services," Stats SA said.

Agriculture, forestry and fishing accounted for most of the growth in the primary sector - having increased 6.2%. "The increase was mainly due to increased production of field crops, horticulture and animal products," Stats SA said.

Overall the secondary sector contracted 0.7% - dragged down by manufacturing (down 0.8%) as six out of 10 manufacturing divisions reported negative growth rates during the quarter.

"The petroleum, chemical products, rubber and plastic products division made the largest contribution to the decrease in second quarter growth," Stats SA said.

Construction decreased 1.4% - due to decreases in activity at both residential and non-residential buildings and construction works.

The electricity, gas and water industry however lifted 0.7% - mainly due to increases in the electricity and water distributed, Stats SA highlighted.

As for the tertiary sector - decreased economic activity for financial intermediation and auxiliary services saw the finance, real estate and business services industry decrease 0.4%. General government services declined 0.9%, due to decreases in employment across all three spheres of government.

On the expenditure front, household consumption expenditure increased 0.5%. Government final consumption expenditure decreased by 0.1% - mainly due to decreases in compensation to employees and spending on goods and services.

Gross fixed capital formation increased by 0.9%. Stats SA noted declines in investment in four asset types - residential and non-residential buildings, transfer costs and construction works.

Drawdown on inventories came to R21.7 billion during the quarter. "Large decreases in electricity and mining contributed to the inventory drawdowns experienced in the second quarter of 2021," Stats SA said.

Exports lifted 4% - linked to increases in trade of mineral products, precious metals and stones as well as vehicles and transport equipment.

By comparison, imports increased 0.4%, driven by increases in mineral products, base metals, animal and vegetable fats and oils, Stats SA said.

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