Bumper harvest helps keep economy afloat
The South African economy grew by 2,0% in the third quarter of 2017 (seasonally adjusted and annualised), down from a revised 2,8% in the second quarter. Agriculture, mining and manufacturing were the main drivers of the expansion, while there was a contraction in general government services resulting from low employment numbers in the public sector.
After recording an increase of 38,7% in the second quarter, the agriculture industry continued to power ahead, expanding by 44,2% in the third quarter.
This is the largest quarterly jump in agriculture production since the second quarter of 1996. Increased production of field crops and horticultural products were the main contributors to growth, with notable increases in the production of maize and vegetable products.
This season’s maize crop is expected to be the largest on record. The Crop Estimates Committee have pegged commercial maize production for this season at 16,74 million tonnes, more than double the 7,78 million tonnes produced last year (2015/16), and higher than the current record of 14,66 million tonnes harvested in 1980/81.2
Mining and manufacturing were the other major contributors to economic growth in the third quarter. Increased gold and platinum production saw the mining industry grow by 6,6%, while the 4,3% rise in manufacturing was spurred on by increased production of both petroleum and metal products.
Finance and business grew by 1,2%, helped along by increased activity in financial mediation, insurance and auxiliary services. There was also positive growth in personal services (0,9%) and transport and communication (0,6%).
Four industries, however, saw a decline in economic activity in the third quarter. Falling employment numbers in the public sector saw general government services posting its third consecutive quarter of negative growth, contracting by 0,7%. Other notable industries that saw a decline were trade and electricity, water and gas. Despite a rebound in retail trade sales, falling wholesale trade sales pulled the trade industry down by 0,4%. The electricity, water and gas industry experienced a 5,5% contraction, a result of falling electricity generation and demand.
Other highlights from the third quarter 2017 GDP release:
- Unadjusted real GDP was up by 0,8% year-on-year in the third quarter of 2017.
- The South African economy grew by 1,0% in the first nine months of 2017 compared with the first nine months of 2016.
- Nominal GDP in the third quarter was estimated at R1,17 trillion.
- Expenditure on GDP grew by 2,1% in the third quarter, spurred on by a rise in household consumption spending and fixed investment. There was, however, a fall in government consumption spending. Exports were down, but imports were down more, resulting in an improvement in net exports (i.e. exports less imports) and, consequently, a positive contribution to total growth from the external sector.