GDP contracts in first quarter of 2016

Wednesday, June 8, 2016

Pretoria - South Africa’s Gross Domestic Product (GDP) contracted by 1.2% in the first quarter of 2016, Statistics South Africa (Stats SA) announced on Wednesday.

“The headline figure, the real GDP production decreased by 1.2% in quarter one, that is a quarter on quarter number and real GDP  year on year is negative at 0.2%,” Statistician General Pali Lehohla said.

The decrease follows on an increase of 0.4% in the fourth quarter of 2015.

The key contributors to the negative GDP growth rate were the mining and quarrying industry as well as the transport, storage and communication industry. Mining and quarrying fell by 18.1% and contributed -1.5% to GDP growth while transport, storage and communication decreased by 2.7% which contributed -0.2% to GDP growth.

The agriculture, forestry and fishing, as well as the electricity, gas and water industries also contracted in the first quarter of 2016.

Meanwhile, finance, real estate and business services increased by 1.9% which contributed 0.4% to GDP growth.

Nedbank analysts earlier in the week had expected economic growth in the first quarter to decline by 0.1% quarter-on-quarter.

Commenting on the figure, Nedbank economists said the economic outlook remains relatively bleak.

"The economy will struggle to grow in 2016 but it is expected to expand by 1% in 2017," it said.

At Wednesday’s media briefing Stats SA also announced that expenditure on real GDP fell by 0.7% in the first quarter of 2016 following an increase of 1.4% in the fourth quarter of 2015.

“This is the first time we are announcing the numbers both from the production and the expenditure side under one roof under one institution,” said Lehohla.

Lehohla said household final consumption expenditure decreased by 1.3% in the first quarter with the main source of the decline being spending on transport while government final consumption expenditure grew by 1%. Both exports and imports decreased by 7.1%.

Responding to a question on whether South Africa is heading towards a recession due to the negative GDP figure, Lehohla said Stats SA could not say whether the country is heading for a recession which happens when an economy experiences two consecutive quarters of negative growth.

“We can’t say that we are heading for a recession, that we do not know, we can only measure going forward. It’s very difficult to say what is happening in the future,” said Lehohla.

Expenditure side of GDP moves to Stats SA

Earlier at the briefing, Reserve Bank Governor Lesetja Kganyago handed over the calculation of the expenditure side of the GDP to Stats SA.

Kganyago said just as the central bank keeps a distance from the calculation of the Consumer Price Index (CPI), it will now also keep a distance from the calculation of GDP.

“Today we are also going to be keeping a distance from the calculation of the GDP from the expenditure side and we are handing that over to Stats SA. It’s been a long journey which we have been comfortable with it’s a journey that started long time ago,” explained the Governor.

The Statistician General thanked the central bank and described the handing over of the expenditure side of GDP as “the little baby” that Stats SA has received from the Governor.

Ben Mphahlele the Chairperson of Statistics Council—which advices the Minister responsible for Stats SA and Statistician General and safeguard the interest of official statistics—welcomed the handover.

“I think today is one of the most important milestones of the development of the South African national statistics system. We are very proud of this work,” he said, while also thanking the Reserve Bank. –SAnews.gov.za

 

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