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Sunrise in Johannesburg.
- South Africa’s economy recovered in the third quarter, but it is still 6% smaller than a year ago.
- Other countries, such as the UK, Spain and Mexico, saw much larger year-on-year declines as the global pandemic hit economies.
- In South Africa, only agriculture and the government sector are on track to grow this year.
- For more articles, go to www.BusinessInsider.co.za.
On Tuesday, Statistics South Africa published a monster economic growth figure: the local economy grew 13.5% compared to the previous quarter. This followed a 17.5% contraction in the second quarter (at the height of the lockdown).
Manufacturing, trade and mining saw strong growth, with South Africa still on track to deliver its best year for exports, largely thanks to raw materials and fruit.
There was also a notable jump in construction works, after eight consecutive quarters of contractions, says Momentum economist Sanisha Packirisamy, an economist at Momentum.
In fact, all sectors saw growth, contributing to an impressive recovery in South Africa, says Stanlib economist Kevin Lings.
Not all countries managed to grow in the third quarter as the pandemic continued to wreak havoc on livelihoods and businesses; India, for example, suffered two consecutive quarters of declines.
Still, the latest GDP data shows that the South African economy in the third quarter was still 6% lower than a year ago.
Here is how much the economies of other countries contracted during the same period:
Philippines -11.5%
United Kingdom -9.6%
Spain -8.7%
Mexico -8.6%
India – 7.5%
Thailand – 6.4%
Italy -4.7%
France -4.3%
Germany -4.2%
Brazil -3.9%
Russia -3.6%
United States – 3.5%
Indonesia -3.5%
Poland -2.0%
South Korea -1.3%
Sources: Bloomberg: Reuters CNBC Icis Bangkok Post Nikkei Asia
So far this year, the South African economy has contracted 7.9% compared to the same period last year, and that comes after years of stagnant growth. It seems that only two sectors, agriculture and the government, managed to grow this year.
It looks like the economy will grow next year, but it may be years before South Africa recovers from the Covid hit.
“We are targeting a shallow recovery of 2% in 2021, as an increase in the number of business closures, persistently higher levels of unemployment, fiscal stress, and ongoing challenges to electricity supply detract from the expected rebound,” he says. Packirisamy.
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