I like to think of myself as a realist – although some may say my outlook veers towards pessimism. Either way, I bring this up, because of the recent “negative” reactions to SA’s latest GDP numbers.

Now, don’t get me wrong.

I’m not surprised the GNU is under scrutiny.

After suffering more than a decade of low economic growth, high unemployment, corruption/crime, and dilapidated infrastructure, South Africans want results from the new coalition government. Or at least some signs that the GNU is making headway with improving the economy.

It’s understandable.

But before you become too pessimistic, let me show you why the latest drop in GDP is not a train smash…

The difference between negative and positive GDP numbers…

According to Statistics South Africa, our economy shrank 0.3% in the third quarter – to the surprise of many.

Sure, on the surface, it’s not a great number. But when you look deeper into the reason why, it makes sense.

Consider that SA’s agriculture sector slumped 28,8% in the third quarter, as droughts and disease impacted production. It’s the largest drop in at least three decades – and helped pull overall GDP growth down by 0.7%.

In other words, the agriculture sector was the difference between positive and negative GDP growth.

The reality is droughts and disease are out of farmer’s (and governments) control. But there are plans to support the agriculture sector during this slump.

Recently, the Department of Agriculture agreed to issue import permits for genetically engineered white and yellow corn from the US to help combat reduced production.

So, the recent GDP decline shouldn’t be all doom and gloom.

Once you look past agriculture, you’ll discover some green shoots…

Consider new vehicles sales rebounded 5.5% higher to 47,924 units in October. In fact, more new cars were bought in October than in the whole of 2024.

And this trend continued into November – with new vehicles sales jumping 8.1% to 48,585 units.

So, why should new vehicle sales matter when it comes to GDP?

Well, it can give you an idea if an economy is recovering and can tell you a lot about how business is doing.

You see, if people are positive about their jobs, are making money and have cash to spare – they buy new cars. On the other hand, if people are under a lot of financial pressure, they are less likely to splurge.

More than this, if people are spending more on online shopping, or at retail stores, there are more goods that need to be delivered. That means logistics companies buy more trucks for deliveries.

Similarly, an increase in business activity and tourism drives rental car demand higher.

And increased car sales also mean there’s more manufacturing activity – as car manufacturers and parts manufacturers are kept busy with new work.

So, car sales firstly show us what is happening to consumers, businesses, and tourism. But they also reveal which industries could see increased growth, or contraction…

Beyond new vehicles sales, there are some other positive numbers to signal a recovery:

• SA electricity production grew 2.9% in the last quarter and up 8% year-over-year.
• Mining and tourism growth are accelerating.
• Passenger rail soared over 100% year-over-year.
• Inflation slowed to 2.8%.

And we haven’t experienced proper interest rate cuts yet!

Next year, SARB should reduce interest rates even more, which should further boost economic activity.

Of course, the GNU still has a lot of work to do to revive SA. But there are positive signs. And it would be foolish to ignore them. Because you could miss out on “economic recovery, profit-opportunities”.