Here is why SA officially plunged into a recession

Stats SA released the findings of the economic activity of the second quarter of 2018 and while it looks like the decline is not as weak as in the first quarter, the two consecutive quarters of negative growth have plunged South Africa into a recession.

According to Stats SA, South Africa’s gross domestic product (GDP) fell by 0.7% in the second quarter of 2018. Less growth generally creates a domino effect which means more unemployment due to a drop in consumer spending that affects businesses and the economy.

The agriculture, forestry and fishing industry and the transport, storage, and communication industry were the largest negative contributors to growth in GDP in the second quarter. The agriculture, forestry and fishing industry decreased by 29.2% and contributed -0.8 of a percentage point to GDP growth. The decrease was mainly because of a drop in the production of field crops and horticultural products.

The transport, storage and communication industry decreased by 4.9% and contributed -0.4 of a percentage point to GDP growth. Decreases were reported for land transport, air transport and transport support services.

The trade, catering and accommodation industry decreased by 1.9% and contributed -0.3 of a percentage point to GDP growth. Decreased economic activity was reported in the retail and motor trade divisions.

In contrast, mining increased by 4.9% and contributed 0.4 of a percentage point to GDP growth, and finance, real estate and business services increased by 1.9% and also contributed 0.4 of a percentage point to GDP growth.

The unadjusted real GDP at market prices for the first six months of 2018 increased by 0.6 % compared with the first six months of 2017.

Expenditure on GDP2

Expenditure on real gross domestic product fell by 0.9% in the second quarter of 2018.

Household final consumption expenditure decreased by 1.3% in the second quarter, contributing -0.8 of a percentage point to total growth. This was the first decrease since the first quarter of 2016.

The main negative contributors to growth in HFCE were expenditures on transport (-6.1% and contributing -0.9 of a percentage point), food and non-alcoholic beverages (-2.8% and contributing -0.5 of a percentage point), clothing and footwear (-6.8% and contributing -0.4 of a percentage point) and, recreation and culture (-7.6% and contributing -0.4 of a percentage point).

Final consumption expenditure by general government increased by 0.7%, reflecting an increase in purchases of goods and services and other interrelated services.

Gross fixed capital formation decreased by 0.5%. The main contributors to the decline were activities associated with machinery and other equipment, transport equipment and residential buildings.

There was a R14.2 billion drawdown of inventories in the second quarter of 2018. Large decreases were reported for the manufacturing, mining and quarrying industries.

Net exports contributed positively to growth in expenditure on GDP. Exports of goods and services were up 13.7%, largely influenced by increased trade in precious metals, mineral products and vegetable products.

Imports of goods and services increased by 3.1%, driven largely by an increase in imports of mineral products, prepared foodstuffs, beverages, tobacco, vehicles and transport equipment.

  AUTHOR
Caxton Central

Latest News

COMMENTS

Top

Thanks for your referral. We have no doubt your friends will love our newsletter as much as you!

Don't forget to verify your email.

to our FREE newsletter
SUBSCRIBE to our FREE newsletter.




SELECT your titles:

Alberton Record
Comaro Chronicle
Kathorus Mail
Southern Courier


Get regular news updates sent directly to your inbox.

Your source of local breaking news and trending stories from across the country.

Be a part of our growing community

1MILFacebook Fans
98KTwitter Followers
5MILMonthly Readers
12MILArticles Published Every Month
72Local Community Websites
CLICK HERETo view an example of our newsletter

SUBSCRIBE to our FREE newsletter

SELECT your titles:

Alberton Record
Comaro Chronicle
Kathorus Mail
Southern Courier

Get regular news updates sent directly to you inbox.

Your source of local breaking news and trending stories from across the country.

Be a part of our growing community

Subscribe Here
1MILFacebook Fans
98KTwitter Followers
5MILMonthly Readers
12MILArticles Published Every Month
72Local Community Websites
Your details:


Your friends: