South Africa’s economy recovered during H2-2020, but not enough to avert the 7% total GDP decline in 2020

SOUTH AFRICA - Report 11 Mar 2021 by Iraj Abedian

Real GDP, arguably the most noteworthy economic metric, indicates that South Africa continued its recovery in the fourth quarter of 2020, registering a growth rate of 6.3% quarter on quarter on an annualized basis. This also marked a somewhat return to "normal" annualized GDP prints following the steep decline of 51.7% q/q and a positive growth rate of 67.3% q/q during the third quarter and the fourth quarter of 2020, respectively. It should be noted, however, that the Q4 2020 print represents a rise in GDP from a low base. The non-annualized quarterly GDP growth for the period came in at 1.5%. On the other hand, relative to the corresponding period in 2019, fourth quarter GDP (unadjusted) declined by 4.1%.

On the whole, South Africa’s economy contracted significantly in 2020 (as was expected on account of the Covid-19 pandemic), with real GDP recording -7%, following the 0.2% in 2019. Nonetheless, 2020 GDP growth still surprised on the upside due to a better-than-expected recovery during H2 2021. For one, the South African National Treasury had forecast 2020 GDP to contract by 7.8% during October’s Medium-Term Budget Policy Statement (MTBPS).

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