Load shedding and KZN floods blamed for SA’s economy shrinking
South Africa's growth was particularly hit by a decline in the manufacturing industry.
South Africa’s gross domestic product (GDP) decreased by 0.7% in the second quarter of 2022, according to Stats SA.
The shrinking of the economy comes after two consecutive quarters of positive growth.
Stats SA said the floods in KwaZulu-Natal (KZN) at the beginning of the year, and load shedding, were major contributors to the country’s decline in growth.
The manufacturing industry was particularly hard hit, largely due to the floods.
“The damage to factories and plants, and disruptions to logistics and supply chains, pulled national manufacturing output down by 5,9%. The biggest drags on growth were petroleum and chemical products, food and beverages, and transport equipment,” Stats SA said.
Manufacturing is the largest industry in KwaZulu-Natal, it added.
Trade, catering and accommodation were also hampered by the floods and lack of electricity.
“The industry recorded a contraction of 1.5% as floods damaged retail outlets and storage facilities. There was also a loss of trading hours due to load shedding.”
Mining output also declined.
“Mining production was dragged lower by gold, coal and diamonds, with the decrease in coal production caused partly by the flooding. Mining output was also negatively affected by load shedding.”
Foot-and-mouth disease and electricity outages led to diminishing returns in the agriculture, forestry and fishing industries.
“Agriculture, forestry and fishing activity decreased by 7.7%, pulled lower by a decrease in the production of animal products.”
The finance, real estate and business services industry increased by 2.4% – one of the few that contributed to GDP growth.
“Growth was driven by increased activity in the banking sector, as well as in insurance and pension funding,” said StatsSA.
Although the country seemed to have recovered from Covid-19 in the previous two quarters, the shrinking in the most recent quarter has brought the economy to back to below the pre-pandemic levels.
Stats SA said six industries have not yet recovered from the Covid pandemic, with construction the hardest hit.
The six industries are:
- Transport, storage and communication
- Electricity, gas and water
- Trade, catering and accommodation,
The industries that have recovered are:
- Agriculture, forestry and fishing
- General government services
- Finance, real estate and business services
- Personal services