South Africa’s gross domestic product (GDP) growth slowed in the third quarter, dragged down by a sharp contraction in the mining sector.
Statistics South Africa’s (Stats SA’s) latest quarterly GDP report showed third-quarter growth of 1.2%, compared with 3.4% in the prior quarter.
Economists indicated that the growth was slower than the 1.5% that the market expected, but that it came as no surprise.
The slower pace was mainly owing to a sharp drop in mining production caused by the wildcat strikes in the platinum- and gold-mining industries.
Investec commented that the slower growth “captured the impact of South Africa’s work stoppages stemming from recent strike action”, pointing to the sector’s seasonally adjusted and annualised growth contracting 12.7% during the quarter under review.
The group also expected the GDP growth for the year to be lower than the previously forecast 2.5%, but not below 2%, as the impact of the mining strikes during the September quarter spiralled into other sectors.
The reduction in mining output dampened manufacturing growth, which increased by only 1.2%, while retail growth slowed to 1.7% as those participating in the strikes were not paid and, therefore, spending less.
Banking group Nedbank said that while it believed weaker global demand held back growth in the manufacturing sector and softer domestic spending dragged down retail growth, a weak and vulnerable world economy would continue to undermine the mining and manufacturing sectors.
Nomura International strategist Peter Attard Montalto added: “Today’s data show the scars of the mining sector and wider labour market unrest, but the real story there will only come out later on and cannot really be inferred from these data properly.”
He stated that most segments of the economy, such as agriculture, construction, communications, finance and taxes showed lower quarterly growth in the third quarter compared with the second quarter.
Agriculture recorded a seasonally adjusted and annualised quarter-on-quarter growth of 7.4%, compared with the growth of 9.3% achieved in the second quarter. Growth in the construction industry fell slightly from 3.4% in the prior quarter, to 3.3% in the quarter under review.
Transport, storage and communication experienced an expansion of only 1.1%, down from 2.2% in the second quarter.
The finance, real estate and business services and general government services were the main contributors to the increase in economic activity in the third quarter, each adding 0.4 percentage points, while the agriculture, forestry and fishing; manufacturing; wholesale and retail; as well as the motor trade and the catering and accommodation industries each added 0.2 percentage points.
The mining and quarrying industry recorded a negative contribution of 0.6 of a percentage point, Stats SA noted.