The economy made a better than anticipated rebound in the third quarter, increasing at a seasonally adjusted and annualised rate of 66.1% as lockdown restrictions were eased.
The economy clawed its way back from the harsh decline of a revised 51.7% experienced during the second quarter, which coincided with the most severe levels of lockdown, according to data released by Stats SA on Tuesday. Stats SA annualises its quarterly GDP statistics — which assumes that the percentage change from one quarter to the following will be maintained for the entire year.
On a seasonally adjusted and non-annualised basis, economic growth in the third quarter was 13.5% compared to the second quarter’s decline of 16.6%.
However, the rebound off a low base does not mean SA is out of the woods yet, with the Treasury and the Reserve Bank expecting GDP to contract about 8% in 2020. On a year-on-year basis, GDP contracted 6%, while for the first nine months of 2020 it contracted by 7.9% compared with the same period in 2019, according to Stats SA.
Economists have warned that it may take years for SA’s economy to return to output levels seen before the Covid-19 crisis.
The quarterly comeback was, nevertheless, better than market expectations. The median forecast from a Bloomberg poll suggested a 54.4% jump, while the Reserve Bank had predicted growth of 50.3% for the quarter.
All sectors in the economy saw a recovery, with manufacturing, trade and mining being the biggest contributors to growth in quarter three.
The expenditure side of GDP saw a similar recovery — increasing at an annualised rate of 67.6% off the second quarter’s revised decline of 53.7%.
Household final consumption expenditure increased at a rate of 69.5%.
Consumption spending accounts for roughly two thirds of GDP but the outlook for households is deeply uncertain. In the third quarter, SA’s unemployment rate hit a record high of 30.8% due to the crisis, while many of those who remained employed had their incomes cut.
As part of the recovery plan to reboot growth, President Cyril Ramaphosa’s administration has launched an ambitious infrastructure plan that will leverage off partnerships with the private sector.
Gross fixed capital formation — a proxy for investment in the economy — also saw a recovery, increasing at a rate of 26.5%.
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