SA economy shrinks in Q1 of 2018

Gross domestic product rose 0.8% on an unadjusted year-on-year basis in the first quarter, compared with a 1.5% expansion in the previous three months, StatsSA said.

Statistics generic. Picture: Freeimages.

PRETORIA - South Africa's economy shrunk by 2.2% in the first quarter of 2018 after expanding by 3.1% in the final quarter of last year, Statistics South Africa said on Tuesday, knocking more than half a percent off the rand.

Gross domestic product rose 0.8% on an unadjusted year-on-year basis in the first quarter, compared with a 1.5% expansion in the previous three months, the agency said.

Economists polled by Reuters had expected a quarter-on-quarter GDP contraction of 0.5%, while the economy was seen expanding 1.9% year-on-year.

On the other hand, the main positive contributors were finance, real estate, business services and government.

Economist Goolam Balam said: “The contraction in the economy during the first quarter of this year was anticipated in light of earlier indications that both the agricultural and manufacturing sectors had experienced noticeable weakness. Having said that, I do anticipate that during the remainder of this year, we will see an expanding economy.”

The rand has weakened slightly off the back of the latest figures.

Economist Azar Jammine says many analysts didn’t expect such a steep decline in GDP figures.

“Many people had expected a weak figure [but] not as weak as this. And one of the reasons for the extent of this weakness has been a sharp downtick in agricultural productions.”

Additional reporting by Gia Nicolaides.

(Edited by Thapelo Lekabe)