SA's GDP drops by 6.4% in first quarter

Tuesday, May 26, 2009

Pretoria - South Africa's Gross Domestic Product in the first quarter of 2009 contracted by an annualised 6.4 percent, Statistics South Africa announced on Tuesday.

The contraction is the second in a row since the last quarter of 2008 that contracted by 1.8 percent.

According to economists, two consecutive quarters of negative growth means an economy is technically in recession.

"The seasonally adjusted real GDP at market prices for the first quarter of 2009 decreased by an annuaslised rate of 6.4 percent compared with the fourth quarter of 2008.

"This is the first instance of two consecutive quarters of negative growth since the fourth quarter of 1992," said Stats SA as the world is experiencing the pinch of the global financial crisis.

The sectors that led to a reduced GDP figure in the first quarter were the manufacturing industry (-3.3 percentage points), mining and quarrying (-1.7 percent), finance, real estate and business services industry (-0.5 percent).

According to Stats SA, executive manager of national accounts Joe De Beer said the mining sector recorded the second lowest level since the second quarter of 1967 at 31.9 percent.

However general government services contributed to positive growth in the economy at 0.5 percentage points. This was followed by the construction industry at 0.4 percent and personal services at 0.2 percentage points.

The figures come two days before the Reserve Bank's Monetary Policy Committee (MPC) announcement on interest rates.

The MPC has already cut rates four times since December, by a cumulative 350 basis points, in an effort to fight off a recession.