The Eastern Cape is in a technical recession due to sharp declines in the construction, manufacturing, and mining industries, which have put employment on a knife’s edge.
This is according to the Eastern Cape Socio-Economic Consultative Council (ECSECC), which showed that although South Africa’s economy contracted in the first quarter of 2024, some provinces were harder hit by poor economic conditions than others.
In the first quarter of 2024, the South African economy shrank by 0.1%, a decrease from the 0.3% growth recorded in the previous quarter.
This growth is lower than the 0.9% rate projected by the IMF for 2024.
Comparing year-on-year, the national GDP decreased by 0.7 percentage points from 0.6% in the first quarter of 2023.
As the national GDP contracted in the first quarter, four out of nine provinces experienced positive growth.
The Western Cape and KwaZulu Natal both saw an increase of 0.2%, while the Northern Cape and Free State recorded a growth of 0.1%.
However, the Mpumalanga province contracted by 0.5%, and the North West and Eastern Cape provinces experienced decreases of 0.4% and 0.3%, respectively, during the same period.
Despite most provinces experiencing economic contractions, the Eastern Cape economy contracted for the third consecutive quarter, entering into a recession in the first quarter of 2024.
The provincial economy declined by 0.3% in 2024Q1, following a 0.1% and 0.3% contraction in 2023Q4 and 2023Q3, respectively.
The Eastern Cape’s GDP, at market prices, declined from R368.8 billion in 2023Q4 to R366.9 billion in 2024Q1.
In comparison to other provinces, the Eastern Cape accounted for 7.9% of the national GDP, while Gauteng (33.9%), KwaZulu Natal (16.6%), and Western Cape (14.2%) were the most significant contributors.
Only two industries in the Eastern Cape, agriculture and electricity, recorded positive growth.
The largest negative contributors to the negative growth in GDP in the first quarter were construction (down by 2.9%), manufacturing (down by 1.5%), mining (down by 1.2%), and transport (down by 0.7%).
Employment taking a hit
As a result of the poor economic conditions, employment is taking a hit in the province, and it’s slowly making its way to having more unemployed people than working people.
The ECSECC’s report shows that employment has declined in several industries, including manufacturing, construction, and personal services.
Additionally, government services, the province’s biggest employer, contracted by 0.2% in the first quarter of 2024, resulting in a notable loss of jobs.
Consequently, the latest Quarterly Labour Force Survey (QFLS)—published by States SA—shows that the Eastern Cape is on track to follow the North West as the second province with more unemployed people than employed.
The QFLS revealed that official unemployment increased by 0.8% from 32.1% in the fourth quarter of 2023 to 32.9% in the first quarter of 2024.
The Western Cape has the lowest standard unemployment rate in South Africa, at 21.4%, which means more people are working than unemployed.
On the other hand, the Eastern Cape has consistently had an above-average official unemployment rate over the last ten years.
When the broader definition of unemployment, which includes discouraged job seekers, is considered, the situation is more severe for most provinces in South Africa, especially the North West and the Eastern Cape.
The extended unemployment rate in South Africa’s provinces ranges from 26% to 54%. According to the expanded definition, the Western Cape is the only province with a rate below 30%.
The North West has an unemployment rate of 53.6%, meaning more adults are out of work and not seeking employment than those employed.
The Eastern Cape closely follows with an unemployment rate of 49.1%, which means it is less than 1% away from having more unemployed people than working people, like the North West.
