In a time when good news seems hard to come by, the latest gross domestic product (GDP) results provide some cautious cheer.
The South African economy grew by 1,3% in 2017, exceeding National Treasury’s expectation of 1,0% growth announced during the National Budget Speech in February.
After a wobbly start to 2017, which saw economic activity contract in the first quarter, the economy saw sustained growth for the remainder of the year. The fourth quarter experienced the highest growth rate of 2017, with the economy expanding by 3,1% quarter-on-quarter (seasonally adjusted and annualised).
The strengthening in economic activity over 2017 was partly driven by an agriculture industry bouncing back from one of the worst droughts in recent history. A bumper maize crop and recovery in other agricultural commodities saw agriculture production rise by 17,7% in 2017 compared with 2016.
The finance and mining industries also contributed positively to GDP growth in 2017. Mining’s growth was spurred on, in part, by increased production of manganese ore, chrome, and iron ore, according to a recent article by Stats SA.1 Rising demand for minerals used in the production of steel contributed to these increases.
Focussing specifically on the fourth quarter of 2017, a rise in the production of animal products saw the agriculture industry continue its buoyant performance, recording a 37,5% quarter-on-quarter rise in production
The trade sector was the second largest contributor to economic growth in the fourth quarter, mostly a result of a rise in activities related to retail, wholesale and motor trade.
The 4,3% rise in manufacturing was largely driven by increased production of products in food and beverages, petroleum, and basic iron and steel.
Despite mining’s increase for the year as a whole, the industry saw a quarter-on-quarter decline in the fourth quarter, largely driven by a fall in the production of gold and platinum group metals (PGMs).
With South African economic growth having exceeded expectations in 2017, all eyes are now on 2018. National Treasury expects growth of 1,5% in 2018. Only time will tell how the economy will fare compared with this forecast.
Key facts from the fourth quarter 2017 GDP release:
- Real GDP was up 3,1% quarter-on-quarter (seasonally adjusted and annualised).
- Unadjusted real GDP was up by 1,5% year-on-year.
- The South African economy grew by 1,3% in 2017 compared with 2016.
- Nominal GDP in the fourth quarter was estimated at R1,21 trillion (for the whole of 2017 the estimate is R4,65 trillion).
- Expenditure on GDP grew by 3,1% in the fourth quarter, with positive contributions to growth coming from consumption, investment and net exports.