South Africa’s economy shrank by 3,2% in the first three months of the year, Stats SA announced on Tuesday 4 June.
‘The 3,2% decline is the biggest quarterly fall in economic activity since the first quarter of 2009, when the economy – under strain from the global financial crisis – tumbled by 6,1%,’ Stats SA said in a note.
The rand fell by more than 1% against the dollar on the news, to trade at R14,64/$.
While analysts and the SA Reserve Bank had predicted a decrease – due to flagging depressed expenditure and investment in the economy, weak consumer demand, the negative impact of load-shedding and recurring falls in mining production – the number still came as a shock. Investec’s Annabel Bishop, for example, had predicted that real GDP was likely to fall by 1,9% in Q1.
Almost all industries contracted when compared to Q4 2018, Stats SA announced, with manufacturing falling by 8,8%, mining down 10,8%, agriculture down 13,2% and electricity shrinking by 6,9%. Transport fell by 4,4%, trade was down 3,6% and construction declined by 2,2%.
Government, on the other hand, grew by 1,2%, finance by 1,1% and personal services by 1,1%.
If SA’s economy contracts again in the next quarter of 2019, the country will enter a recession.