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South Africa’s gross domestic product (GDP) rebounded by a whopping 66.1% in the third quarter of the year, reflecting the recovery of the economy since the height of the Covid-19 lockdown. This is on an annualized and seasonally adjusted basis.
Stats SA clarified its GDP figures after some confusion during the second quarter release, which showed a 51% decline in GDP due to the lockdown.
The data reflects the latest quarter compared to the immediately preceding quarter, for example 2020-Q3 with 2020-Q2.
According to Stats SA, there are seasonal differences between the quarters, such as that climatic conditions influence agricultural production, the Easter holidays and the festive season influence trade, transport and accommodation, and year-end closings influence in construction and many commercial services, which complicates the situation. evaluation.
To ensure that these comparisons remain valid, the data is seasonally adjusted. The quarter-on-quarter growth rate can be annualized to show what the annual rate would be (that is, year after year) if the quarter-on-quarter rate were repeated four times in a row.
However, the annualized rate only provides a crude forecasting model that is useful in times of stable economic performance, but less so in a highly volatile environment, the statistics body warned.
Without annualizing the data, which reflect GDP in real terms, the seasonally adjusted quarter-on-quarter growth rate was 13.5%. This compares with the real fall in GDP in the second quarter of 16.6%.
Given that the rebound in real GDP (13.5%) does not coincide with the drop of -16.6%, this means that GDP has not yet returned to “pre-Covid-19 levels”. However, the recovery was much better than the forecasts of economists and analysts, which should alleviate some fears that the lockdown caused irreversible damage to the economy.
Notable movements in GDP for the third quarter:
- The manufacturing industry grew at a rate of 210.2% in the third quarter, contributing 16.2 percentage points to GDP growth. All ten manufacturing divisions reported positive growth rates in the third quarter;
- The mining and quarrying industry grew at a rate of 288.3%, contributing 11.8 percentage points to GDP growth;
- The commerce, catering and accommodation industry increased at a rate of 137%;
- The transportation, storage and communications industry increased at a rate of 79.3% as a result of increases in land transportation, air transportation, transportation support services and communications services;
- Financial, real estate and business services increased at a rate of 16.5% in the third quarter;
- The construction industry increased 71.1% in the third quarter.
“The increase in economic activity in the third quarter may sound impressive, but it comes from the very low base recorded in the second quarter,” StatsSA said.
“South African industries still have a long way to go before reaching production levels seen before the pandemic. Despite the rebound, the economy is still 5.8% smaller than it was at the end of 2019 ”.
Despite the rebound, data shows that household spending remains subdued compared to the third quarter of 2019, 4.8% (not annualized). The increase in spending on restaurants and hotels may seem meteoric, but it is still half of what it was in the same period last year.
Exports increased at an annualized rate of 201.4% in the third quarter of 2020, mainly driven by the increase in exchange vehicles and transportation equipment; precious stones and metals; machinery and equipment; and mineral products.
Imports fell in the third quarter, falling at an annualized rate of 1.6%.
Read: Second wave of coronavirus in South Africa and when to expect a vaccine
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