SA economy grew by 1.9 percent in first quarter

Fin24

South Africa’s economy was stronger than expected in the first quarter of 2022, with real gross domestic product (GDP) growing by 1.9 percent from the previous quarter.

The size of the economy is now at pre-pandemic levels, with real GDP slightly higher than what it was before the Covid-19 pandemic, Statistics SA said on Tuesday.

Last year, the South African economy grew by 4.9 percent as it started to recover from a 6.4 percent slump in 2020 due to pandemic-related lockdowns.

The median expectation among economists polled in a Bloomberg survey was for growth of 1.2 percent in the first quarter. The economy grew by a revised 1.4 percent in the fourth quarter of 2021.

The manufacturing sector saw strong growth of almost 5 percent in the first quarter, driven by a rise in the production of petroleum and chemicals, food and beverages, and metals and machinery.

But construction and mining activity declined compared to the previous quarter.

Household consumption increased by 1.4 percent in the first quarter, with a sharp 6.5 percent increase in spending on restaurants and hotels.

Second-quarter GDP is expected to be hit by the impact of flooding in KwaZulu-Natal and increased load shedding, as well as the knock-on effects of the Ukraine invasion, particularly higher food and fuel prices. In addition, higher interest rates are also expected to weigh on growth.

The SA Reserve Bank expects growth of 1.7 percent this year.