GDP shocker, and a further drop in agriculture output
Following a stellar performance in 2017, South Africa’s agriculture output shrank by massive 29.2% in the 2nd quarter of 2018 and contributed -0.8 of a percentage point to GDP growth. This follows a contraction of 24.2% quarter-on-quarter (q/q) in the 1st quarter 2018. The decline was attributed to a decreased production in fields crops and horticultural products. For field crops, this was not surprising as planted area for 2017/18 for crops that are currently being harvested was cut by 7% year-on-year (y/y) to 6.12 million hectares with the biggest crop, maize, falling by 12% y/y. Further, the decline in planted area was largely due to depressed producer prices on the back of a massive crop of 17.66 million tons of maize in the 2017 harvest. The drop in horticultural products is largely due to the impact of drought in Western Cape where a significant amount of the fruits and vegetables are produced.