South Africa’s gross domestic product (GDP) bounced back in the third quarter after four consecutive declines. The sharp recovery is largely as a result of the easing of Covid-19 lockdown restrictions.
According to Statistics South Africa (Stats SA), the country’s economy grew at an annualised rate of 66.1% in the third quarter of 2020. Without annualising, the quarter-on-quarter seasonally adjusted growth rate was 13.5%.
This is after a difficult second quarter, when the GDP fell by just more than 16.4%, resulting in an annualised growth rate of -51%. The second quarter, which Stats SA dubbed the “pandemic quarter”, was the worst on record, and the result of the economic blow dealt by Covid-19.
According to macroeconomics website Trading Economics, the recovery marks the strongest pace of expansion since at least 1993. Before the announcement, the website reported that the consensus was for 52.6% quarter-on-quarter growth, after the second-quarter slump.
Every sector recorded positive growth in the third quarter. Manufacturing was the biggest driver of growth, increasing at a rate of 210.2% in the third quarter and contributing 16.2 percentage points to the overall GDP growth. According to Stats SA, all 10 manufacturing divisions reported positive growth rates in the third quarter.
Mining increased at a rate of 288.3% and contributed 11.8 percentage points to GDP growth. “In the third quarter the industry recovered largely on account of the easing of local and global lockdown restrictions,” Stats SA reported.
Kevin Lings, the chief economist at Stanlib, said this across-the-board growth contributed significantly to what he considers an impressive bounceback.
Lings told the Mail & Guardian that the recovery was much bigger than economists expected, even with higher revised projections. “If you go back a few months, obviously we were expecting a recovery once we opened up after the lockdown. So it was a question of how big the bounceback was going to be,” he said, adding that back then economists were looking at between 30% and 40% growth.
But as other surprising data started coming out, it became clear that GDP projections had to be revised upwards, Lings said.
“We had taken our number to somewhere between 53% and 54%. So we were aware that the data was surprising to the upside … But 66% is significantly better than what most were expecting.”
Lings said it is vital that growth be sustained into 2021. Although the numbers will not be quite as dramatic for the fourth quarter, continued efforts towards economic recovery will likely reflect as positive growth, he added.
But, Lings said, it is important that measures are put in place to ensure solid growth in the coming year. This will depend partly on how quickly a Covid-19 vaccine is rolled out locally.