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Statistics South Africa (Stats SA) released the first-quarter (Q1) gross domestic product (GDP) figures for 2021. These statistics show that the economy accelerated at an annualised rate of 4,6% (1,1% quarterly). This is better than the 2,5 to 3% expected by many economists.
Eight industries recorded positive growth during the first three months of the year, with the star performers being finance, mining and trade industries, achieving upticks of 7,4%, 18,1%, and 6,2%, respectively.
Even before the release of the statistics, the recent higher commodity prices and increasing global demand indicated that recovery from Covid-19-related impacts could be more pronounced than initially anticipated.
Worth noting, and further adding impetus to the positive GDP number, was household consumption that jumped by 4,7% in the same period under review. This comes a week after the country’s unemployment rate rose to a record 32,6%.
Agriculture retreats on seasonality factors
Looking at the agricultural sector, agricultural GDP shrunk by 3,2% and contributed -0,1% to the GDP growth. This decrease was attributed mainly to the lower production of field crops and animal products.
This was to be expected as the first quarter of the year is generally quiet in terms of activity. A great deal of agricultural GDP is concentrated in field crops. With the planting of summer crops, planting occurs after the first rain of the season, which is around October. Planting typically continues until January, with harvesting kicking off in May (April for early harvest).
Similarly, winter crops are planted mainly in the second quarter of the year and crops are limited in size, compared to the summer crop. Harvesting usually occurs in the third and fourth quarter of the year. These seasonality factors underpin the lower GDP contribution. Nevertheless, the second quarter should see a rebound, particularly anchored in the positive yield estimates for summer crops.
Animal production has also been negatively affected by the continuing drought in some pockets of the country and diseases in other parts. However, as herd rebuilding continues, a positive outcome can be expected during the latter part of the year. – Press release, Agri SA