SA GDP falls by 3.2%, biggest drop in 10 years

South Africa's economy shrank by 3.2% in the first three months of the year, Stats SA announced on Tuesday.

"The 3.2% decline is the biggest quarterly fall in economic activity since the first quarter of 2009, when the economy – under strain from the global financial crisis – tumbled by 6.1%," said Stats SA in a note.

The rand fell by over 1% against the dollar on the news, to trade at R14.64/$ at 12:24.

While a decrease had been predicted by analysts and the SA Reserve Bank - who flagged depressed expenditure and investment in the economy, weak consumer demand, the negative impact of load shedding and recurring falls in mining production - the number still came as a shock. Investec's Annabel Bishop, for example, had predicted that real GDP was likely to fall by 1.9% in Q1.

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Almost all industries contracted when compared to the fourth quarter of 2018, Stats SA announced, with manufacturing falling by 8.8%, mining down 10.8%, agriculture down 13.2% and electricity shrinking by 6.9%. Transport fell by 4.4%, trade was down 3.6% and construction declined by 2.2%.

Government, on the other hand, grew by 1.2%, finance by 1.1% and personal services by 1.1%.

If SA's economy contracts again in the next quarter of 2019, the country will enter a recession.

SA's economy slid into recession in the first half of 2018 after experiencing two successive quarters of negative economic growth. Growth gained pace in the third quarter.