The South African economy grew by 0.4% in the second quarter (Q2) of 2024 according to the latest economic data released by Statistics South Africa on Tuesday.
The finance, manufacturing, trade, and electricity, gas and water supply industries drove most of the economy’s momentum on the production/supply side, while demand side, household and government consumption and a build-up in inventories contributed favourably to growth.
According to Statistics SA seven industries recorded growth for the period, including the finance, real estate and business services industry, which had the biggest impact, adding 0.3 of a percentage point to gross domestic product (GDP) growth.
Other notable contributors included manufacturing, trade, and electricity, gas and water. Manufacturing turned positive after shrinking in the first quarter, rising by 1.1% in the second quarter. Production was mainly driven by motor vehicles and transport equipment and food and beverages.
Buoyant economic activity in wholesale, retail and tourist accommodation pushed the trade, catering and accommodation industry higher by 1.2%.
The country experienced no load shedding in the second quarter, which helped the electricity, gas and water supply industry. It grew by 3.1%, driven by increased electricity generation and water distribution.
“If we ignore the topsy-turvy economic environment caused by the pandemic in 2020, the 3.1% growth rate represents the sharpest increase since the third quarter of 2008 (also 3.1%),” Stats SA said.
The construction industry showed growth after a year of decline, edging marginally higher due to economic activity related to residential and non-residential buildings. However, there was a slowdown in construction works.
Three industries contracted in the second quarter. Transport, storage and communication was the largest negative contributor, declining by 2.2% and dragging GDP growth down by 0.2 of a percentage point. Strike action and a fall in freight volumes contributed to the industry’s poor performance.
Agriculture, forestry and fishing faced headwinds, including lower than expected rainfall in parts of the country, which affected maize and soya bean production, heavy rain in KwaZulu-Natal that affected sugar cane crops, and foot-and-mouth disease that impacted sheep and pork production.
Mining recorded a second consecutive decline. The industry’s poor showing in the second quarter was associated with decreased production of iron ore, coal, diamonds and gold.
However, on the demand side of the economy, rising consumer confidence saw household consumption expenditure strengthen by 1.4%.
“Consumers increased their spending across most product categories. The miscellaneous goods and services product group was the largest positive contributor, driven mainly by increased spending on insurance,” Stats SA said.
Government consumption was also positive, helped by a rise in purchases of goods and services and an increase in compensation of civil servants.
Imports rose by 1.7% on the back of increased trade in vehicles and transport equipment (excluding large aircraft), vegetable products, mineral products, and textiles and textile articles.
However, exports dipped because of weaker trade in vegetable products, mineral products, vehicles and transport equipment (excluding large aircraft), and base metals and articles of base metals.
There was a R9.6 billion build-up in inventories in the second quarter.
“The supply of goods in the economy exceeded demand, prompting the trade, manufacturing and finance industries to place newly produced goods into inventories,” Stats SA said.
Gross fixed capital formation, which includes investments in infrastructure and other fixed assets, disappointed for a fourth consecutive quarter. The 1.4% decline in the second quarter was due to lower investments in computer software, biological assets, construction works, machinery and other equipment, and transport equipment.
