South Africa’s Gross Domestic Product (GDP) figures have been reported to have dropped below expectations. This means the national economy is seeing a quarter-on-quarter decline. According to Stats SA, South Africa’s GDP decreased by 0.3 % in Q3 2024. This was followed by the same increase (0.3 %) in the second quarter of the year. This is far below Investec and Nedbank’s prediction, which foresaw an increase in growth by 0.5% quarter on quarter growth. Stats SA said that the agriculture, forestry and fishing industry decreased by 29.8% contributing -0.7 of a percentage point, to the negative GDP growth.
This was mainly due to decreased economic activities reported for field crops. The transport, storage and communication industry decreased by 1.6%, contributing -0.1 of a percentage point. Decreased economic activities were seen for land transport and transport support services. The trade, catering and accommodation industry also decreased by 0.4%. Decreased economic activities were reported for wholesale trade, motor trade, and food and beverages. General government services also dropped by 0.1%, primarily due to decreased employment in national and provincial government and extra-budgetary institutions. On the positive side, the finance, real estate and business services industry increased by 1.3%, adding 0,3 of a percentage point. Stats SA said that increased economic activities were seen for financial intermediation, insurance and pension funding, auxiliary activities, real estate activities and other business services.
The decrease in industries shows a lack of support for the private sector by the state. A healthy and strong private sector that is able to grow and adapt is needs to increase the size of the economy. At the heart of this is the nurturing of entrepreneurial skills and promotion of the growth of corporations. The sudden decrease in the growth of GDP is harmful to job and income security. The government and corporations need to cooperate and identify the source of the loss of income in terms of the related industries from transport to trade, catering and accommodation. The harm this could do to jobs and services could have a deep negative impact on the overall livelihoods of South Africans. The overall slow growth will lead to South Africans being able to lose their jobs and unable to support their households.
Expenditure on real GDP dropped by 0.2% in Q3 following an increase of 0.4% in Q2 2024. Household final consumption expenditure (HFCE) jumped by 0.5%, contributing 0.3 of a percentage point to the total negative growth. The highest growth rates were seen for non-durable and semi-durable goods. The main positive contributors to the increase in HFCE were expenditures on food and non-alcoholic beverages (0.9% and contributing 0.1 of a percentage point), housing, water, electricity, gas and other fuels (0.6% and contributing 0.1 of a percentage point), recreation and culture (1.2% and contributing 0.1 of a percentage point) and restaurants and hotels (1.1% and contributing 0.1 of a percentage point). Final consumption expenditure by the general government dropped by 0.5% and contributed -0.1 of a percentage point. This was mainly due to decreases in purchases of goods and services and compensation of employees.
When we are speaking about Q2 and Q3 we are referring to each quarter of the year. In the first quarter GDP grew over 0.2% in Q3 and then there was increase of 0.4% in Q2 prior to that. This shows an overarching decline in GDP growth. The fast decline in HFEC is another worrying aspect as average households won’t be able to make ends meet. The sudden decline in GDP could be due to the impact of cheaper goods from Asia particularly China. The overall impact on trade’s decline could also be due to some raw materials or resources becoming more expensive on extraction. The affordability of vital items and services will go up if the resources for it are limited. The shrinking of GDP growth could also be due to a lack of interest in South African products for export. This is due to them being expensive.
Inflation could have its part to play in this. However, despite the decline in the overall growth of GDP there has been an upsurge in employment.
Despite fluctuations in quarterly unemployment data, South Africa has gained roughly 200,000 jobs over the past year. South Africa’s employment landscape has shown significant improvement, with the official unemployment rate declining to 32.1% in the third quarter of 2024—a notable 1.4 percentage-point improvement compared to the previous quarter. This positive trajectory reflects a year-on-year gain of approximately 200,000 jobs, as the number of employed individuals rose from 16.7 million in Q3 2023 to 16.9 million in Q3 2024, according to Statistics South Africa’s Quarterly Labour Force Survey. The momentum in job creation, while encouraging, is not just a result of cyclical economic factors but also stems from targeted policy interventions. Central to these efforts is the second phase of the Government Business Partnership, launched under South Africa’s Government of National Unity in October 2024.
This initiative focuses on addressing structural challenges in key sectors such as energy, logistics, and crime reduction.
The truth is that even though GDP may be experiencing overall decline, businesses still experienced a slight in growth. This led to a steady increase in jobs for South Africans. This is an opportunity, Pretoria, the provinces and the municipalities as well as the private sector be they major companies or small businesses should learn from. The government needs to invest in encouraging entrepreneurial skills of those at the base of society. This will help them start their own businesses and lead to the creation of jobs. The increase in job prospects may also be in part due to government tackling inflation and curbing the high cost of living. South Africa has a moment of hope that should be seized. President Cyril Ramaphosa needs to have the ear of the business community and also decide what is the best way to encourage exports from South Africa across the continent and the world.
The African Continental Free Trade Agreement is already in place and provides a blueprint Pretoria can learn from. Only time will how our political and business leaderships utilize these opportunities.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
