On a quarter-on-quarter basis, real GDP growth contracted to 1.8% in the fourth quarter of 2008 from 0.2% in the third quarter of 2008. This is the sharpest quarterly contraction in 17 years, signifying that the South African economy could slip into a recession in 2009.
The main drivers behind the quarterly contraction in GDP were manufacturing, electricity, gas and water. However, agriculture, construction and finance contributed positively to the economic activity.
South African GDP growth is bound to remain weak as activities across all sectors remain under pressure. We expect the real GDP growth rate for the first quarter of 2009 to have contracted to 0.9% year-on-year, while the quarter-on-quarter rate is expected to have contracted to around 6.6% for the same period.