GDP contracts in first quarter of 2016

Posted On Wednesday, 08 June 2016 19:26 Published by
Rate this item
(0 votes)

South Africa’s Gross Domestic Product (GDP) contracted by 1.2% in the first quarter of 2016, Statistics South Africa (Stats SA) announced on Wednesday.

 Pali Lehohla StatsSA

“The headline figure, the real GDP production decreased by 1.2% in quarter one, that is a quarter on quarter number and real GDP year on year is negative at 0.2%,” Statistician General Pali Lehohla said.

The decrease follows on an increase of 0.4% in the fourth quarter of 2015.

The key contributors to the negative GDP growth rate were the mining and quarrying industry as well as the transport, storage and communication industry. Mining and quarrying fell by 18.1% and contributed -1.5% to GDP growth while transport, storage and communication decreased by 2.7% which contributed -0.2% to GDP growth.

The agriculture, forestry and fishing, as well as the electricity, gas and water industries also contracted in the first quarter of 2016.

Meanwhile, finance, real estate and business services increased by 1.9% which contributed 0.4% to GDP growth.

Nedbank analysts earlier in the week had expected economic growth in the first quarter to decline by 0.1% quarter-on-quarter.

Commenting on the figure, Nedbank economists said the economic outlook remains relatively bleak.

"The economy will struggle to grow in 2016 but it is expected to expand by 1% in 2017," it said.

At Wednesday’s media briefing Stats SA also announced that expenditure on real GDP fell by 0.7% in the first quarter of 2016 following an increase of 1.4% in the fourth quarter of 2015.

“This is the first time we are announcing the numbers both from the production and the expenditure side under one roof under one institution,” said Lehohla.

Lehohla said household final consumption expenditure decreased by 1.3% in the first quarter with the main source of the decline being spending on transport while government final consumption expenditure grew by 1%. Both exports and imports decreased by 7.1%.

Responding to a question on whether South Africa is heading towards a recession due to the negative GDP figure, Lehohla said Stats SA could not say whether the country is heading for a recession which happens when an economy experiences two consecutive quarters of negative growth.

“We can’t say that we are heading for a recession, that we do not know, we can only measure going forward. It’s very difficult to say what is happening in the future,” said Lehohla.

Expenditure side of GDP moves to Stats SA

Earlier at the briefing, Reserve Bank Governor Lesetja Kganyago handed over the calculation of the expenditure side of the GDP to Stats SA.

Kganyago said just as the central bank keeps a distance from the calculation of the Consumer Price Index (CPI), it will now also keep a distance from the calculation of GDP.

“Today we are also going to be keeping a distance from the calculation of the GDP from the expenditure side and we are handing that over to Stats SA. It’s been a long journey which we have been comfortable with it’s a journey that started long time ago,” explained the Governor.

The Statistician General thanked the central bank and described the handing over of the expenditure side of GDP as “the little baby” that Stats SA has received from the Governor.

Ben Mphahlele the Chairperson of Statistics Council—which advices the Minister responsible for Stats SA and Statistician General and safeguard the interest of official statistics—welcomed the handover.

“I think today is one of the most important milestones of the development of the South African national statistics system. We are very proud of this work,” he said, while also thanking the Reserve Bank.

Last modified on Wednesday, 08 June 2016 19:49

Most Popular

Residential sectional title sales again on the rise

May 27, 2021
Andrew_Golding_Golding_PropertyGroup
Over the past 15 years, the sectional title market in South Africa has become entrenched…

Ongoing property market uncertainty makes the right finance partner key to extracting value

May 26, 2021
Claire Denny
Results from the listed property sector in 2020 showed property values reducing by an…

Pick n Pay and Fortress co-invest in a super distribution centre development

May 26, 2021
Fortress_Pick_n_Pay
Fortress REIT announced that their biggest logistics development to date was signed with…

Exemplar REITail declares final dividend of 49.07 cps and announces 100% distribution

May 25, 2021
Mall of Thembisa
Rural and township retail specialists, Exemplar REITail, have declared a final dividend…

East Rand Mall will soon deliver the first phase of its major taxi rank upgrade

May 26, 2021
Phase 1 upgrade to the taxi rank at EastRand Mall
The first-phase upgrade of East Rand Mall taxi rank in the retail heart of Boksburg,…

Please publish modules in offcanvas position.