This factsheet is a brief summary of the latest economic growth figures for South Africa and the Western Cape, using the quarterly Gross Domestic Product (GDP) data release by Statistics South Africa1 (Stats SA), as well as the subsequent data update from Quantec2. These statistics will be unpacked in further detail in the next 10-year anniversary edition of EPIC.
After rebounding in the previous quarter (with 0,4% growth), the South African economy continued on its path of recovery, recording growth of 0,6% quarter-on-quarter (non-annualised, as per the change in Stats SA’s reporting conventions3) in the second quarter of 2023. Despite an improvement of only 0,2 of a percentage point from the previous quarter, the second quarter outperformed the Bureau for Economic Research’s (BER) above-consensus expectation of 0,5% growth4. Similarly, the Western Cape recorded [non-annualised] growth of 0,5% quarter-on-quarter in the second quarter of 2023, an improvement of 0,3 of a percentage point from the previous quarter’s growth of 0,2%. As illustrated in Figure 1, the provincial economy’s [overall] performance mirrors that of the national economy.
Figure 1: GDP growth per quarter, quarter-on-quarter, 2015Q1 to 2023Q2 (non-annualised percentage changes)
At the national level, the majority of sectors (six) recorded growth in the second quarter of 2023. Of these, the largest sectoral growth was recorded in the agriculture sector, which grew by 4,2% and added 0,1 of a percentage point to the total national growth rate. This was followed by the manufacturing and mining sectors, which recorded quarter-on-quarter growth of 2,2% and 1,3%, and added 0,3 and 0,1 of a percentage point, respectively, to the total national growth rate in the second quarter of 2023. Further growth was recorded in the community and social services (0,7%), finance and business services (0,7%), and general government (0,6%) sectors, adding a combined 0,3 of a percentage point to the total national growth rate.
For the second quarter of 2023, four sectors recorded quarter-on-quarter contractions. The transport and communication sector recorded the largest quarter-on-quarter contraction (-1,9%), and subtracted the most (-0,2 of a percentage point) from the total national growth rate. This was followed by the electricity and water sector which contracted by 0,8% quarter-on-quarter, as well as the trade and hospitality, and construction sectors, which each contracted by 0,4% quarter-on-quarter; the latter 3 sectors subtracted a combined 0,1 of a percentage point from the total national growth in the period under review.
The Western Cape’s GDP performance largely mirrored that of the national economy, with similar sectoral trends, in the second quarter of 2023. As at the national scale, the agriculture sector recorded the largest sectoral growth rate, of 4,1% quarter-on-quarter, followed by the manufacturing sector with 2,2% quarter-on-quarter growth, and which added 0,2 and 0,3 of a percentage point to the total provincial growth rate, respectively. Further growth was recorded in the finance and business services, general government, and community and social services sectors, which each grew by 0,6% quarter-on-quarter in the second quarter, and added a combined 0,3 of a percentage point to the total provincial growth rate.
At the provincial level, five sectors contracted during the second quarter of 2023. The mining sector recorded the largest sectoral contraction (-3,6% quarter-on-quarter), however due to its minimal contribution to the Western Cape economy (0,2% share), this translated into only subtracting 0,01 of a percentage point from the total provincial growth rate. This was followed by the transport and communication sector which recorded a contraction of 1,9% quarter-on-quarter, and subtracted the most from the total provincial growth rate with -0,2 of a percentage point. The electricity and water (-0,9%), trade and hospitality (-0,6%) and construction (-0,4%) sectors also recorded quarter-
on-quarter contractions, and subtracted a combined 0,1 of a percentage point from the province’s total growth rate in the second quarter.
The second quarter’s performance shows slight improvement in the manufacturing sector, which recorded a second consecutive quarter of growth, at a higher rate than the previous quarter. In contrast, after three consecutive quarters of positive growth, the construction sector recorded a contraction. While the second quarter’s performance has taken national real GDP further beyond pre-Covid-19 levels, it is also useful to compare economic activity at the sectoral level to pre-Covid-19 levels, so as
to monitor economic recovery. For the Western Cape economy, Table 2 illustrates that overall economic activity (i.e. total GDP) shown in the top row, continues higher than that of the fourth quarter of 2019. At the sectoral level, four sectors (finance and business services; community and social services; agriculture; and transport and communication) managed to maintain economic activity at levels higher than their respective pre-pandemic level, with the addition of a fifth sector, general government. For the second quarter of 2023, the construction, trade and hospitality, manufacturing, electricity and water, and mining sectors’ economic activity levels remained below their respective pre-pandemic output levels. In the quarter under review, all of these (5) sectors also recorded lower rand value output than in the previous quarter, with the exception of the manufacturing sector which edged closer to its per-pandemic level.
Note: 2019 Q4 is the base year, to which all following quarters are compared.
The year-on-year data for the Western Cape indicates a similar performance to that of the country as a whole, as illustrated in Figure 2. Following a drop in the previous quarter [to below 1%], the year- on-year performance at both national and provincial levels improved in the second quarter of 2023. South Africa experienced year-on-year growth of 1,7% (annualised), while the Western Cape economy recorded year-on-year growth of 1,8% in the quarter under review.
In the absence of timeous GDP data available at the city level, the above provincial analysis is used as a proxy for Cape Town as the city contributes around 73% towards the Western Cape’s GDP6. In the last 10 years, the variation of the city’s GDP growth rate from the provincial growth rate7 has been, on average, 0,1 of a percentage point. If this were to hold true for the second quarter of 2023, a plausible range for Cape Town’s non-annualised and seasonally adjusted quarter-on-quarter economic growth in the second quarter is between 0,4% and 0,6%. The finance and business services sector, which accounts for a higher share of the local economy (40% compared to 35% of the provincial economy), may have a greater positive impact. Similarly, the agriculture sector’s positive impact on the city’s overall performance would be more muted as its share of the local economy is
lower than at the provincial level. Further GDP analyses will be unpacked in the next anniversary edition of EPIC.