South Africa’s gross domestic product (GDP) growth has slowed from 4.1% in the last quarter of 2014 to 1.3% in the first quarter of this year, weighed down by a contracting manufacturing sector, Statistics South Africa (StatsSA) revealed in its quarterly GDP update on Tuesday.

The marginal expansion was chiefly driven by a 10.2% growth in the mining and quarrying industry, a 3.8% expansion in the finance, real estate and business
services and growth of 1.2% by the wholesale, retail and motor trade, catering and accommodation industry.

According to the report, economic activity in the mining and quarrying industry reflected positive growth as a result of higher production in the mining of coal and other metal ores, while the growth in finance, real estate and business services came as a result of increased activities in banking.

Increases in turnover in the wholesale and retail trade divisions further bolstered growth in the wholesale, retail and motor trade, catering and accommodation sectors, it added.

Conversely, economic activity in the manufacturing industry reflected negative growth of 2.4%, owing to lower production in the petroleum, chemical products, rubber, plastic products, radio, television and communication apparatus, professional equipment, wood and wood products, paper, publishing and printing divisions.

Nedbank outlined in a statement that the GDP figures were consistent with the South African Reserve Bank's general assessment of the economy, reflecting little underlying momentum, with considerable downside risks emanating from the country's electricity woes, other structural constraints and policy uncertainties.

“The Monetary Policy Committee will, therefore, probably try to keep rates on hold at the next two to even three meetings, despite the upside risks to inflation and South African Reserve Bank governor Lesetja Kganyago's increasingly hawkish rhetoric. Much will now depend on cost-push factors, primarily the size of the unscheduled Eskom tariff increase,” it stated.

The nominal GDP at market prices during the first quarter of the year was R965-billion, representing a R14-billion reduction on that of the fourth quarter of 2014.

The most notable performances were provided by the agriculture, forestry and fishing sectors, which expanded by R8-billion to R18-billion; the finance, real estate and business services division, which expanded by R6-billion to R186-billion; and the wholesale, retail and motor trade, catering and accommodation sectors, which decreased by R14-billion to R125-billion.

Reflecting subdued market performance, manufacturing decreased by R9-billion to R111-billion quarter-on-quarter, while the transport, storage and communication sectors decreased by R8-billion to R83-billion and mining by R8-billion to R68-billion.

According to StatsSA, the country’s largest industries – as measured by their nominal value-add in the first quarter of the year – were finance, real estate and business services, at 21.9%, general government services, at 17.3%, wholesale, retail and motor trade, catering and accommodation, at 14.7% and manufacturing, at 13%.

Nedbank expected the economy to grow by a subdued 2.2% in 2015 as a whole, helped by moderately firmer retail activity and some recovery in mining off last year's low base.

“However, the upside will be contained by load-shedding, lower international commodity prices and subdued global demand,” it cautioned.