South Africa’s gross domestic product (GDP) rebounded by a massive 66.1% in the third quarter of the year, reflecting the economy’s recovery from the height of the Covid-19 lockdown. This is on a seasonally adjusted and annualised basis.
Stats SA cleared up its GDP figures after some confusion during the second quarter release, which showed a 51% decline in GDP due to lockdown.
The data reflects the latest quarter compared to the immediate preceding quarter, e.g. 2020-Q3 with 2020-Q2.
According to Stats SA, there are seasonal differences between quarters such as weather conditions influence agriculture production, holidays of Easter and the festive season influence trade, transport and accommodation, and year-end closures influence construction and many business services – which adds complication to the assessment.
To ensure that these comparisons remain valid, the data is seasonally adjusted. The quarter-on-quarter growth rate can be annualised to show what the annual (i.e. year-on-year) rate would be if the quarter-on-quarter rate were to occur four times in succession.
However, the annualised 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 stats body warned.
Without annualising the data – reflecting the GDP in real terms – the quarter-on-quarter seasonally adjusted growth rate was 13.5%. This is compared to the real decline in GDP in the second quarter of 16.6%.
With the real GDP rebound (13.5%) not matching the -16.6% decline, this means that the GDP has not yet returned to ‘pre-Covid-19 levels’. However, the bounce back was much better than forecasts from economists and analysts, which should ease some fears that the lockdown caused irreversible damage to the economy.
Notable movements in GDP for the third quarter:
- The manufacturing industry increased 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 increased at a rate of 288.3%, contributing 11.8 percentage points to GDP growth;
- The trade, catering and accommodation industry increased at a rate of 137%;
- The transport, storage and communication industry increased at a rate of 79.3% as a result of increases in land transport, air transport, transport support services and communication services;
- Finance, real estate and business services increased at a rate of 16.5% in the third quarter;
- The construction industry increased by 71.1% in the third quarter.
“The surge in economic activity in the third quarter may seem impressive, but it comes off the very low base recorded in the second quarter,” StatsSA said.
“South African industries still have a long way to go before reaching levels of production 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, the data shows that household expenditure is still subdued compared with the third quarter of 2019, down 4.8% (not annualised). The rise in spending on restaurants and hotels might seem meteoric, but it is still half of what it was in the same period last year.
Exports increased at an annualised rate of 201,4% in the third quarter of 2020, driven mostly by increased trade-in vehicles and transport equipment; precious metals and stones; machinery and equipment; and mineral products.
Imports were down in the third quarter, declining at an annualised rate of 1.6%.