Local government elections, increased mining of iron ore, water restrictions and reduced electricity consumption. Find out more about these, as well as other factors, that influenced economic growth in the third quarter.

The South African economy grew by 0,2%¹ quarter-on-quarter (compared with 3,5% in the second quarter), according to estimates of real gross domestic product.

Mining was the main positive contributor to growth in the third quarter. After shrinking by 17,5% in the first quarter, the mining industry recovered strongly in the second quarter, growing by 16,1%. The growth rate of 5,1% in the third quarter was mainly a result of increased production in mining of ‘other’ metal ores, in particular iron ore. Click on the graph to enlarge.

Activities related to the local government elections in August 2016 also contributed positively to economic growth. The payment of additional salaries to thousands of temporary electoral staff, as well as increased spending on goods and services, pushed general government services up by 1,8%.

Other industries that recorded positive growth were finance (1,2%), personal services (0,6%), construction (0,3%) and transport (0,3%).

Four industries contracted in the third quarter:

The agriculture industry posted its seventh consecutive quarter of economic decline, on the back of one of the worst droughts in recent history. The third quarter decline of 0,3% was mainly a result of a decrease in the production of horticulture products.

The trade industry recorded its first contraction since the second quarter of 2015, declining by 2,1%. This was largely a result of lacklustre performance in wholesale, retail and motor trade and catering and accommodation.

The implementation of water restrictions across the country, together with waning electricity consumption, saw the electricity, gas and water industry fall by 2,9%.

The manufacturing industry contracted by 3,2% in the third quarter, driven mainly by decreases in the production of petroleum and chemicals; basic iron and steel; and food and beverages.

Other quick facts from the latest GDP release:

• Year-on-year growth in the third quarter of 2016 was 0,7%.
• Real GDP increased by 0,4% in the first nine months of 2016 compared with the first nine months of 2015.
• The finance, real estate and business services industry has recorded positive growth every quarter since the fourth quarter of 2010.
• Nominal GDP was estimated at R1 087 billion.

¹ Unless otherwise stated, growth rates are quarter-on-quarter, seasonally adjusted and annualised.

Download the GDP release here.

Photo: AngloGold Ashanti, http://www.mediaclubsouthafrica.com/

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