Analysts had predicted a 0.4% contraction in the October-December period, so the released GDP figure exceeded forecasts.
Seven of the 10 industries tracked by Statistics South Africa shrank in October-December, with agricultural output falling 3.3% quarter on quarter, mining 3.2%, finance 2.3%, trade 2.1% and manufacturing 0.9%.
The slump compares to the 1.6 percent seasonally adjusted quarter-on-quarter growth rate in July through September.
The data means South Africa could be heading for recession and highlights the damage that the worst electricity outages on record are doing to Africa's most industrialized economy.
It prompted the rand to extend losses against the dollar.
South African President Cyril Ramaphosa on Monday appointed a new electricity minister as part of a cabinet reshuffle that he hopes will improve service delivery and shore up the governing party's support ahead of a general election next year.
State-owned energy firm Eskom, saddled with constantly breaking down generating plants, is failing to meet demand.
Taken as a whole, economic growth is forecast to be as low as 0.3 percent in 2022 due to the electricity supply crisis, according to the central bank, down from 2.5 percent in 2022.
This report was sourced from Reuters and Agence France-Presse.