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SA economy shrank by 7% in 2020, but managed to grow in Q4

9 March 2021 6:36 PM
Tags:
Gross Domestic Product
SA Economy
GDP
Recession
The Money Show
Stats SA
Economic growth
Bruce Whitfield
Statistics South Africa
Kevin Lings
Pandemic
Coronavirus
Lockdown
COVID-19
economic contraction

The pandemic-hit economy plummeted in 2020 relative to 2019, but we've seen the worst of the decline says Stanlib's Kevin Lings.

The Covid-19 pressure cooker placed economies around the world under tremendous strain.

As widely predicted, South Africa's economy contracted by an estimated 7% in 2020.

RELATED: 'It could take SA until 2025 to resume level of economic activity of Q4/2019'

It's the biggest annual fall in economic activity the country has seen since at least 1946 says Statistics South Africa.

An increase of 0.2% was recorded in 2019.

The national statistical service released the latest GDP figures on Tuesday.

There was good news in Quarter 4, with the economy managing to grow at an annualised rate of 6,3%.

Household expenditure and exports were the biggest contributors to growth in this quarter.

Increased spending on goods and services and employment by government also contributed to the positive growth says Stats SA.

Growth for gross fixed capital formation was driven largely by increasing investments in transport equipment, construction works, machinery and other equipment.

Bruce Whitfield interviews Kevin Lings, Chief Economist at Stanlib.

The economy plummeted in 2020 relative to 2019... In total you would say there was a massive fall-off in economic activity... certainly the worst performance in decades...

Kevin Lings, Chief Economist - Stanlib Asset Management

Almost every sector recorded a decline last year... The key exception was agriculture...

Kevin Lings, Chief Economist - Stanlib Asset Management

On the upside, are we seeing a general improvement?

Analysing the data for the fourth quarter of 2020 does indicate that we are moving in the right direction says Lings.

We've passed the worst of the decline and now we are seeing an improvement pretty much across every single sector in South Africa.

Kevin Lings, Chief economist - Stanlib Asset Management

What's difficult to get your head around is during that phase [the last six months] we've seen unemployment go up; we've seen tax collection fall behind; we've seen government debt rise... but we've got to keep reminding ourselves that we're just looking at the performance relative to that low point - the middle of last year which was the worst of the lockdown.

Kevin Lings, Chief economist - Stanlib Asset Management

In general, he notes, you could say that South Africa has done well in recovering after an extreme lockdown and that recovery has been well above expectations.

If certain expectations are met we could see a recovery to 2019 levels ahead of 2024, as is being forecast.

Lings says these include a successful vaccine rollout, containing power outages and an improvement in world growth.

Listen to his analysis on The Money Show:




9 March 2021 6:36 PM
Tags:
Gross Domestic Product
SA Economy
GDP
Recession
The Money Show
Stats SA
Economic growth
Bruce Whitfield
Statistics South Africa
Kevin Lings
Pandemic
Coronavirus
Lockdown
COVID-19
economic contraction

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