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South Africans warned to spend wisely in wake of fuel price drop, Q3 growth

Stats SA on Tuesday announced a 2.2% increase in the third quarter Gross Domestic Product.

Picture: Pexels

JOHANNESBURG- As South Africans welcome the news of a growing economy and a lower petrol price, consumers are being warned against using the money they don't have.

Stats SA on Tuesday announced a 2.2% increase in the third quarter Gross Domestic Product.

Petrol also decreased by R1.84 from Wednesday.

Debt rescue's Neil Roets says this will not necessarily have a direct impact on the pockets of consumers.

“The thing with the petrol price is that when it goes up then people are struggling more. But when it comes down, we do not tend to see that reflecting on other goods and service because of the fact that it’s always long-lived.”

The rise in economic activity in the third quarter follows two consecutive quarters of negative growth, which is a widely recognised indicator of recession.

According to Stats SA, the economy slumped by 2,6% in the first quarter of 2018 and a further 0,4%1 in the second quarter.

Manufacturing was the main driver of positive growth in the third quarter.

The industry grew by 7,5%2, largely as a result of increased production of basic iron and steel, metal products and machinery; wood and paper; petroleum products; and motor vehicles.

This is the largest jump in manufacturing production since the second quarter of 2016.

Key facts from the third quarter 2018 GDP release:

  • Expenditure on GDP increased by 2,3% in the third quarter of 2018.

  • Gross fixed capital formation fell by 5,1% in the third quarter, largely as a result of declining investment in construction works, transport equipment, and non-residential buildings.

  • Households spent more on food, beverages and household furnishings in the third quarter, driving up household final consumption expenditure by 1,6%.

  • Unadjusted real GDP (measured by production) was up by 0,8% in the first nine months of 2018, compared with the first nine months of 2017.

(Edited by Leeto M Khoza)

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