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This week’s GDP figures show that the mining and construction industries have entered a recession as the sectors recorded negative growth in the third and fourth quarters of last year.
A recession is defined as two consecutive quarters of negative growth.
Mining activity fell by 1.7% last year.
Gold, copper and iron ore were the biggest drags on mining output.
Gold production fell by 14.5% last year, the biggest annual slump since 2008.
Copper production tumbled by 28.5%, the biggest fall on record since 1981, the year Stats SA started publishing the current series of monthly mining data.
The construction industry had its worst year in two decades, according to the GDP figures. Production slumped by 1.2%, the industry’s biggest annual fall since 1999, when activity fell by 1.4%. The industry saw its second consecutive year of economic decline last year.
Agriculture also had a difficult year, registering a contraction of 4.8%. A slowdown in the production of field crops and horticultural products stunted growth in the first two quarters.
In a poor sign for local economic outlook, Stats SA reported that gross fixed capital formation fell by 2.5% – this was the fourth consecutive quarter of decline.
Investec economists said: “A gradual recovery in economic growth is premised on a revival in fixed investment rates, with growth expected to improve somewhat to a modest pace of recovery of around 1.7% this year, and only reach 3% by 2023.”
The economy grew by 1.4% in the fourth quarter of last year, contributing to an overall growth rate of 0.8% for the whole year.
Business Unity SA said that the 0.8% overall growth rate was disappointing, especially because of the contractions in mining, construction and gross fixed capital formation.
Last year, South Africa experienced its first recession since 2009 in the first and second quarters, with the economy shrinking by 2.7% in the first quarter and contracting by 0.5% in the second.
Capital Economics said that, with inflation likely to fall below the SA Reserve Bank’s central target and with growth still being soft, an interest rate cut could take place within the next 12 months.
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