– Q4 GDP down 1.3% q/q seasonally adjusted
– Analysts had predicted 0.4% contraction
– Seven out of 10 industries shrink
– Rand slips after data released
Pretoria — South Africa’s economy contracted more than expected in the last quarter of 2022, as an escalation in rolling power cuts contributed to most sectors from agriculture to mining shrinking.
The data means South Africa could be heading for recession and highlights the damage that the worst electricity outages on record are doing to Africa’s most industrialised economy.
It prompted the rand to extend losses against the dollar.
South African President Cyril Ramaphosa on Monday appointed a new electricity minister as part of a cabinet reshuffle that he hopes will improve service delivery and shore up the governing party’s support ahead of a general election next year.
Figures from Statistics South Africa showed gross domestic product contracted 1.3% in the fourth quarter compared to the previous three months in seasonally adjusted terms.
Analysts had predicted a 0.4% contraction in the October-December period.
Statistics South Africa revised third quarter growth to 1.8% quarter on quarter, from a previous estimate of 1.6%, but the country will tip into recession – defined as two consecutive quarters of falling GDP – if it contracts again in the current quarter.
Seven of the 10 industries tracked by Statistics South Africa shrank in October-December, with agricultural output falling 3.3% quarter on quarter, mining 3.2%, finance 2.3%, trade 2.1% and manufacturing 0.9%.
Struggling state electricity utility Eskom’s scheduled power cuts, caused by breakdowns at its ageing fleet of coal-fired power plants, have meant up to 10 hours a day without power in recent months, hurting businesses of all sizes.
After 2.0% economic growth for 2022 as a whole, South Africa’s economy is now 0.3% bigger than it was in 2019 before the COVID-19 pandemic, Stats SA said, adding that the expansion was smaller than a 3.5% rise in the country’s population over the same period.
Gross domestic product grew 0.9% year on year in the fourth quarter, worse than forecasts for a 2.2% expansion.
*Bhargav Acharya, Anait Miridzhanian, Editing: Alexander Winning & Susan Fenton – Reuters
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