A year of lockdown: South Africa will count the costs this week

Statistical and economic data published this week will provide the first estimate of how South Africa’s Covid-19 lockdowns has impacted its GDP over the past year.

On Tuesday (9 March), Statistics South Africa will release its GDP data for Q4 2020. This will complete the picture for 2020 and provide the first official estimate of the magnitude of the GDP decline due to the Covid-19 health crisis and the associated lockdown restrictions, said economists from the Bureau for Economic Research (BER).

In a research note on Monday, the group said that it expects to see further recovery after the hard lockdowns devastated the country in Q2 2020.

However, it warned that even with this bounce back, the annual GDP contraction is likely to be significant.

“After GDP surged back in Q3 2020 after the second-quarter collapse, we expect a sharp moderation in the fourth quarter. However, at a projected roughly 5.5% q-o-q (annualised), the GDP recovery is set to have continued.

“Such a quarterly number, and assuming no major revisions to the previous quarters, would imply a huge full-year GDP contraction of about 7%.”

The BER said that the release of the Q1 RMB/BER Business Confidence Index on Wednesday will also give an indication of the country’s response to the lockdown.

This will provide the first indication of how the economy performed through the peak of the second Covid-19 wave during January and into March, it said.

Other data shows recovery 

Data from vehicle industry body Naamsa shows that aggregate domestic vehicle sales for February came in at 37,521 units.

This translates to an annual decline of 13.3%, almost unchanged from the January number. On a monthly basis, however, sales rose by a robust 7.9%.

“This was driven by sales of commercial vehicles. Export sales saw an annual decline of 8% in February. The next few months should see a rebound in annual growth due to the low base set in 2020.

“Nonetheless, given the still constrained domestic demand environment, it will take some time before the overall level of sales exceeds pre-Covid levels,” the BER said.

The Absa manufacturing PMI rose to 53 index points in February, from 50.9 the month before. The activity index, which increased for the first time in five months, rose by 8.6 index points.

“This was supported by a continued improvement in new sales orders. However, after a surprise uptick in January, the employment index declined deeper below the 50-point mark,” the BER said.

“Finally, after a sharp increase the previous month, the purchasing price index rose further after a hefty fuel price increase at the start of the month. In addition to an expected further rise in fuel prices, a sharp hike in electricity tariffs will also push up costs going forward.

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