SA’s economy is still 1.8% smaller than before Covid-19

South Africa’s economy grew by 1.2% in the fourth quarter of 2021, pushing the country’s GDP slightly closer towards pre-pandemic levels.

According to data released by Statistics South Africa on Tuesday, the country’s annual real GDP increased by 4.9% in 2021. This is after GDP contracted 6.4% in 2020, as South Africa reeled from the Covid-19 pandemic’s onslaught on the economy.

The 1.2% quarter-on-quarter growth recorded in the last three months of 2021 marks a rebound from the 1.5% contraction the previous quarter. The third-quarter shrinkage — which was the result of the social unrest that swept through KwaZulu-Natal and Gauteng last July, as well as Covid-19’s third wave — came after four consecutive quarters of growth.

The fourth quarter increase in GDP is slightly higher than the Bloomberg consensus, which forecast quarter-on-quarter growth of 1%.

Last year’s economic expansion of 4.9% is more or less in line with economists’ expectations. South Africa’s economy, Nedbank economists said, would have benefited from firm global demand and higher commodity prices, as well as improved household finances.

The Statistics South Africa data shows that household final consumption expenditure increased by 2.8% in the fourth quarter, contributing 1.8 percentage points to total growth. Growth in household consumption was driven by spending on food, at restaurants, on furnishings and on transport.

South Africa’s economy is yet to rebound to what it was prior to the pandemic. The economy is 1.8% smaller than it was before Covid-19.

In the budget, tabled last month, the treasury said it expects the economy to reach its pre‐pandemic GDP this year. It has also projected modest growth in the medium term, which is expected to average 1.8%.

According to StatsSA’s data, fourth-quarter economic growth was mainly driven by the manufacturing, retail, agriculture and personal services sectors.