South Africa GDP growth slows across the board

By Prinesha Naidoo and Amogelang Mbatha

(Bloomberg) – South Africa’s economic growth slowed less than expected in the fourth quarter as domestic fixed investment slumped.

Annualised growth in gross domestic product eased to 1.4% in the final quarter from a revised 2.6% the prior three months, Statistics South Africa said Tuesday in the capital, Pretoria. The median estimate of economists surveyed by Bloomberg was for growth of 1.2%. The economy expanded 0.8% in 2018 compared with a revised 1.4% in the prior year.

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Key insights:

  • Expenditure on GDP rose an annualised 1.6%.
  • Household spending rose by 3.2% and fixed capital formation fell 2.5%.
  • The economy expanded 1.1% in the fourth quarter from a year earlier.
  • Africa’s most-industrialised economy hasn’t expanded by more than 2% a year since 2013 and is battling to gain momentum despite political changes in late 2017 and early 2018, as businesses and foreign investors seek real reforms.
  • President Cyril Ramaphosa’s ability to implement growth-enhancing reforms have been hindered by politics as a faction of his ruling African National Congress remains aligned to scandal-ridden former President Jacob Zuma. Ramaphosa must win a strong mandate from the electorate on May 8 to cement his power in the party and government.
  • The government and central bank see the economy expanding by 1.5% and 1.7% respectively in this year.


  • The rand strengthened for the first time in six days against the dollar, gaining 0.7% to 14.1357 by 12:45pm in Johannesburg. Yields on rand-denominated government bonds due in December 2026 fell 4 basis points, the most since Feb. 26, to 8.69%.

What the Bloomberg economist says …

The headline figure was better than expected, but the heavy dependence on private consumption carries risks for the longevity of the current expansion. We expect the sharp drop in fuel prices in January and December to give further impetus to consumption in the first half of 2019, but risks to the rand and power supply is likely to continue to inhibit investment. The risks to our 1.4% growth forecast for this year are increasingly tilted towards the downside. – Mark Bohlund, Bloomberg Economics