Domestic Output

Having contracted at rates that varied between 0.3 per cent and 2.2 per cent between 1990 and 1992, South Africa’s real gross domestic product (GDP) grew by 3.4 and 3.2 per cent in 1995 and 1996, respectively, before it slowed down to 1.7 per cent in 1997. The slow-down in economic growth continued in the first half of 1998, and the economy experienced actual contraction of aggregate output in the third and fourth quarters. Real value added to GDP increased at a seasonally adjusted and annualized rate of about 0.5 per cent in each of the first two quarters of 1998, before declining at a rate of about 2.5 and 0.5 per cent in the third and fourth quarters, respectively. The net effect of positive growth in the first half and negative growth in the second half of 1998 was a total real output that was about the same as in 1997. The sectoral composition of growth in 1998 produced interesting trends. The manufacturing industry, which accounted for 24 per cent of total GDP in 1997, recorded a decline in total output (clothing, machinery, chemicals and transport subsectors recorded rising output volumes) of 1.5 per cent from the levels attained in 1997. The declining trend in manufacturing production, which started in the third quarter of 1997, fell sharply in the third quarter of 1998, and then recovered slightly from a low base during the fourth quarter. The following factors contributed to this declining trend in 1998: The sharp increases in the number of workdays lost because of strikes and other forms of labor unrest. The slow-down in the growth of domestic final demand. The weak growth in export demand, particularly from the Far East. The steadily diminishing activity in the primary sectors (agricultural output declined substantially in the last two quarters of 1998 because of lower field-crop production than in the previous season; weak global demand and the consequent decline in international commodity prices which contributed to the slow-down in mining output that was evident in most of the major subsectors, such as gold and coal). The utilization of production capacity in manufacturing was 83.5 per cent in 1995. This figure declined to 80.5 per cent in the first half of 1998, and declined further to 79.3 per cent in the third quarter. Growth in output by the sector supplying electricity, gas and water slowed down from 4.5 per cent in 1997 to 0.5 per cent in 1998. The real value added in 1998 declined significantly because of the decline in the industrial consumption of electricity and the unusually mild winter that reduced the demand for electricity for heating purposes in South Africa and its neighboring countries. Likewise, real value added by the construction sector also receded to about that of 1997, as demand in the housing market weakened and business investment in new buildings tapered off because of the relatively high level of mortgage interest rates. The subdued mood in the business sector, and among consumers, slowed the rate of increase in the real value added by most of the various types of tertiary activities. The catering and accommodation sector remained buoyant as tourist activities expanded and domestic final demand continued to grow, although at slower rates. Growth in real value added by the transport, storage and communications sectors was boosted by the expansion of the telecommunications network. Percentage contribution of various sectors to gross domestic product (GDP), 1996 – 1998, at current prices   1996 1) 1997 1) 1998 1) Agriculture, forestry and fisheries 4,8 4,5 4,3 Mining 8,1 7,8 7,9 Subtotal: Primary 12,9 12,3 12,2 Subtotal: Secondary 2) 30,7 30,8 30,4 Subtotal: Tertiary 3) 56,4 56,9 57,4 Total 100,0 100,0 100,0 1) Provisional and subject to change 2) Secondary includes manufacturing, electricity, gas, water and construction 3) Tertiary includes trade, catering, accommodation, transport, communications, finance, insurance, real estate and other community, social and personal services, including the Government Source: South African Reserve Bank

Last Revised: Monday, November 17, 2008 Return to SACG Home