Get more Mail & Guardian
Subscribe or Login

South African economy contracts 7% in 2020 amid Covid-19 slump

South Africa’s GDP grew 6.3% in the last quarter of 2020, despite a second wave of Covid-19 and lockdown restrictions. 

Once again the country’s recovery has exceeded economists’ expectations, but the economy — which declined 7% in 2020 — is still reeling from the effects of Covid-19. This is slightly better than the treasury’s -7.2% prediction for 2020.

Forecasts put quarter-on-quarter GDP growth at between 4% and 5.5%. Nedbank economists predicted the economy would grow 3.9% in the fourth quarter and that overall it would contract 7.2% in 2020. The Bureau of Economic Research had a slightly more optimistic view, projecting 5.5% quarter-on-quarter growth at the end of 2020.

Kevin Lings, the chief economist at Stanlib, forecast 5.1% growth in the last quarter of 2020. “The 6.3% was above expectations. I think similar to the third quarter, growth exceeded expectations because almost every sector of the economy recorded improved growth,” Lings said on Tuesday.

In the third quarter of 2020, the economy’s quarter-on-quarter seasonally adjusted growth rate was 13.5%.

According to Statistics South Africa’s GDP numbers, eight industries recorded positive growth between the third and fourth quarters of 2020. The largest positive contributors to GDP growth in the fourth quarter were the manufacturing, trade and transport industries.

The manufacturing industry increased at a rate of 21.1% in the fourth quarter, contributing 2.4 % points to the overall GDP growth. Nine of the 10 manufacturing divisions reported positive growth rates in this quarter.

The trade, catering and accommodation industry increased at a rate of 9.8% and the transport, storage and communication industry increased at a rate of 6.7%.

Lings noted that these industries recorded growth despite the second wave of Covid-19, which triggered stricter lockdown measures. 

Mining and finance both declined in the final quarter. The 1.4% decline in mining came after the industry grew by an impressive 271.2% in the third quarter of 2020. 

“But broadly it was good … The overall performance is better. But for the year as a whole it is still -7%, so it doesn’t change that. There was still a massive decline during last year,” Lings said.

“But I think the story is that in the second half of the year, we were clearly able to recover. We’ve still got a way to go to fully recover. But it does suggest that we have got a reasonable pick up that is probably better than what people anticipated in the middle of last year.”

In its budget document, the treasury forecast that GDP will grow by 3.3% in 2021. This growth will be supported by a mass Covid-19 vaccination programme, the treasury said.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

Family wants clarity on SANDF soldier killed in friendly fire...

Corporal Simanga Khuselo join the peacekeeping mission in the DRC to save money to build his family a home

SA soldiers have been fighting in a distant land for...

Troops were sent to the Democratic Republic of the Congo in 2001 as part of the UN peacekeeping mission that became an offensive against rebels

More top stories

Roads decimate West Africa’s chimpanzee population

The species face mounting pressure from roads and infrastructure development in Ghana, Guinea, Guinea Bissau, Ivory Coast, Liberia, Mali, Senegal and Sierra Leone

South Africa gets major investment to treat Covid-19, TB, cancer,...

President Cyril Ramaphosa welcomed the investment, noting that it ‘is a leapfrog to cutting edge technology’

Mining industry vaccinates over 200 000 workers, mandatory vaccination not...

Minerals Council aims to get 80% of its workforce vaccinated by November

Despite inflation risks, the monetary policy committee keeps rates on...

Inflation rose well beyond the Reserve Bank’s midpoint target in August

press releases

Loading latest Press Releases…