Data to show Covid’s economic cost
Manufacturing rebound likely
All eyes will be on Statistics South Africa (Stats SA) on Tuesday when it releases 2020 fourth quarter gross domestic product (GDP) print, which is expected to shed light on how the moribund economy finished a torrid year.
South Africa’s economy grew by an annualised 66.1 % in the third quarter of 2020, recovering from a record 51.7% slump in the April-june period. Despite the rebound, the economy was still 5.8% smaller than it was at the end of 2019, as Covid-19 hamstrung economic activity.
FNB economist Siphamandla Mkhwanazi said the manufacturing sector undoubtedly supported real GDP growth in the last quarter of last year.
“The release of fourth GDP data is important for two reasons. First, it will show how resilient various economic sectors were in that quarter as easing of lockdown restrictions continued.
“Second, the data will give us a more precise estimation of how much capacity the economy lost in 2020, relative to the fiscal stimulus package that the government responded with to support vulnerable households and businesses.”
The banking giant expects the economy to have grown in the region of 6%, which effectively implies that real GDP likely contracted by about 7% last year.
South Africa’s manufacturing industry’s recovery could lift this year’s economic growth after output unexpectedly rebounded in December 2020 following 18 consecutive months of year-on-year contraction.
Data from Stats SA last month showed that manufacturing production rose 1.8% in December of 2020 compared to the same month a year ago.
The key mining sector saw output increase 0.1% from a year earlier in December of 2020.
It was the first increase in mining activity after nine consecutive months of decline. The agriculture sector is also expected to aid economic growth this year.
Senior economist at BNP Paribas SA Jeff Schultz said he expects a protracted real GDP recovery to 2019 levels as the pandemic has had a deep and lasting impact on incomes and employment.