By Ed Stoddard
In the middle of 2020, there were widespread concerns that South Africa’s economy for the year would suffer a double-digit contraction. Turns out it was a 7% contraction, which is still dreadful — and represents the biggest decline in a century.
Statistics South Africa (Stats SA) unveiled the data on Tuesday. South Africa’s gross domestic product (GDP) in the fourth quarter (Q4) of 2020 grew at a seasonally adjusted and annualised rate of 6.3%, which was better than expected. The Bloomberg consensus forecast was Q4 seasonally adjusted and annualised rate growth of 4.3%.
The bigger-than-expected Q4 spurt meant the 2020 contraction of 7% was not as bad as anticipated. It is certainly better than a few months ago when expectations for the size of the shrinkage ranged from 8% to 10% or more. The hard lockdown in 2020 throttled economic activity to such an extent that the Q2 contraction was 51% on an annualised basis (where you assume a quarterly figure applies for the full year). A 66% rebound followed in Q3 and then the 6.3% growth in Q4.
The biggest driver of growth in the last quarter of 2020 was manufacturing.