SA’s economy grew 1.9% in Q1 2022

South Africa’s economy expanded by 1.9% in the first three months of 2022, an uptick from the 1.2% growth reported in the fourth quarter (Q4) of 2021.

In its routine release of the country’s quarterly gross domestic product (GDP) figures, Statistics South Africa (Stats SA) reported that economic performance in the period was led by growth in the manufacturing and the trade, catering and accommodation industries.

According to Stats SA, the manufacturing industry grew by 4.9% in Q1, contributing 0.6 percentage points to GDP growth, while the trade, catering and accommodation industry grew by 3.1%.

However, the construction and mining industries both registered contractions of 0.7% and 1.1% respectively.

GDP grew by 4.9% overall at the end of 2021, marking a post Covid-19 recovery after the economy contracted by 6.4% in 2020.

With the country’s unemployment rate for Q1 2022 at 34.5% – slightly lower than that seen in Q4 2021 of 35.3% – there is more pressure on government to agitate much higher levels of economic growth that will usher in more jobs.

Read: SA’s unemployment rate declines for the first time since 2020

New investment increases

The state of the country’s economy is further seen in the recorded rise in new investments during the reporting period.

Stats SA revealed that total gross fixed capital formation (GFCF) came in at 3.6% in Q1 2022, up from the 1.6% reported in Q4 2021.

“The main contributors to the increase were machinery and equipment (5.4% and contributing 2.2 percentage points), transport equipment (13.5% and contributing 1.2 percentage points) and ‘other’ assets (3.6% and contributing 0.4 of a percentage point),” Stats SA says in its release.

However, Stats SA did note that there was a R4 billion drawdown of inventories during the period. Contributing to these drawdowns was the decrease in trade and electricity.

Hammering down on growth

With Russia’s attack on Ukraine approaching its fourth month, consequent global supply chain disruptions resulting from the conflict has seen South Africans battling rapidly rising fuel prices, inflation and interest rates.

Recent consumer price index (CPI) figures from Stats SA revealed that annual inflation was 5.9% in April, a five-year high.

Further punching down on the country’s growth capability is its energy supply challenges. South Africa has endured 28 days (about 673 hours) of load shedding this year alone.

Read:
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Future growth

As the recent KwaZulu-Natal floods occurred outside of the reporting period of Q1, their impact will be seen in the Q2 figures.

Data collected by the Department of Trade, Industry and Competition shows that more than 800 companies were impacted by the floods, causing about R7 billion worth of damage in the province.

According to KZN Premier Sihle Zikalala, the floods – which took place at the start of April – affected more than 30 000 jobs in the province. Car manufacturer Toyota is just one of the major companies which had to enforce a temporary closure at its Prospecton production plant.

Toyota South Africa Motors (TSAM) said at the time that the closure would last for at least 12 weeks, as the plant tries to recover from the devastating impacts of the floods.

Read:
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