South African GDP declines by 0.7% in the second quarter of 2022;- After two consecutive quarters of positive growth, the country’s real gross domestic product (GDP) dropped by 0.7%1 in the second quarter of 2022, Statistics South Africa (Stats SA) said on Tuesday.
South African GDP declines by 0.7% in the second quarter 2022
The nation’s real gross domestic product (GDP), which had experienced two straight quarters of growth, shrank by 0.7%1 in the second quarter of 2022, according to data released on Tuesday by Statistics South Africa (Stats SA).
The nation’s economy was already frail and had only recently returned to its pre-pandemic levels when the devastating floods in KwaZulu-Natal and load shedding contributed to the downturn, according to Stats SA.
South African GDP In Different Sectors
1. Manufacturing
The national statistical agency reports that manufacturing suffered the most as a result of flooding, which negatively impacted a number of businesses.
According to figures from 2019, the manufacturing sector accounts for a fifth of the nation’s manufacturing production, making it the largest industry in KwaZulu-Natal.
“The national manufacturing production was reduced by 5.9% as a result of damage to factories and facilities, as well as disruptions to logistics and supply chains.”
Petroleum and chemical products, food and drinks, and transportation equipment all experienced the greatest decline in growth.
2. Trade
Additionally, according to Stats SA, power outages nationwide and flooding in KwaZulu-Natal had a detrimental impact on trade, catering, and lodging.
The sector had a 1.5% decline as floods harmed storage and retail facilities.
Additionally, due to load shedding, trading hours were lost.
3. Mining
Diamonds, gold, and coal all contributed to a decline in mining output. Flooding also had an impact on coal production, which also suffered from load shedding.
The principal factor limiting economic activity in the power, gas, and water supply industries was load shedding brought on by a lack of generation capacity. Water supply problems also occurred as a result of the KwaZulu-Natal floods and the Eastern Cape drought.
4. Agriculture
According to Stats SA, activity related to agriculture, forestry, and fishing decreased by 7.7% as a result of a decline in the production of animal products.
The decline was influenced by power outages and the spread of foot-and-mouth disease.
[Read] After two consecutive quarters of positive growth, the country’s real gross domestic product (GDP) dropped by 0.7%1 in the second quarter of 2022, Statistics South Africa (Stats SA) said on Tuesday https://t.co/YzDcIQQQZS @StatsSA pic.twitter.com/ZLPmDgahtX
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5. Real estate
On the plus side, the 2.4% increase in GDP in the second quarter of this year was mostly driven by the banking, real estate, and business services sectors.
Increased activity in the banking industry, as well as in insurance and pension funds, was the main driver of growth.
6. COVID-19
The COVID-19 effects on the economy took almost two years to recover from, with real GDP returning to pre-pandemic levels in the first quarter of 2022, according to Stats SA.
The 0.7% fall in the second quarter of 2022 drove GDP back below the fourth quarter of 2019 before the pandemic level of R1 148 billion, proving that the rebound was fleeting.
According to Stats SA, when all industries are taken into account, the recovery story becomes more convoluted.
Using the same technique as a recent piece that compared South Africa’s COVID-19 recovery with that of other nations demonstrates how long it took for each industry to recover to its fourth quarter of 2019 level from the second quarter of 2020 when national economic activity was at its lowest.
Only four industries have reached or exceeded their pre-pandemic levels of production by the second quarter of this year.
“Finance, real estate, and business services took two quarters to recover to their fourth quarter of 2019 level, whereas personal services took three quarters to get back on its feet after experiencing a decline in the second quarter of 2020.”
Agriculture, forestry, fishing, and government all appear to have fared reasonably well during the epidemic in terms of real value added.
Six industries, including construction, still have not fully recovered. The construction sector has decreased by 24% since the outbreak.