South Africa came out of its longest recession in 28 years as the economy rebounded more than projected in the third quarter when most of the curbs to contain the spread of the coronavirus were eased.
Gross domestic product expanded an annualised 66.1 per cent in the three months through September from the previous quarter, following a revised 51.7 per cent decline in the three months through June, Statistics South Africa said on Tuesday in the capital, Pretoria.
That’s the strongest growth since at least 1990 and the first positive number after four quarters of contraction. The median estimate of 14 economists in a Bloomberg survey was for a 54.4 per cent increase in output.
On a non-annualised basis, the economy expanded 13.5 per cent from the previous quarter. Compared with the same period last year, GDP contracted by 6 per cent, the second straight quarter of decline.
The rebound in the quarterly figure was expected as output resumed in Africa’s most-industrialised economy after most activity was shuttered for much of the second quarter due to a strict nationwide lockdown. The recovery remains vulnerable, with power shortages and slow structural reforms likely to weigh on sentiment.
For the nine months through September, GDP contracted by 7.9 per cent from last year. That’s the clearest indication of how much the economy could shrink for the full year and is in line with forecasts from the government and central bank.
A resurgence in Covid-19 cases in Europe and the US has hit some of South Africa’s major trading partners and sources of tourism income, while a rise in infections at home could see some restrictions reimposed. That would make it more difficult to bring down the official unemployment rate that returned to a 17-year high in the third quarter, improve revenue collection and curb a wide budget deficit and surging government debt.
Household spending, which makes up about 60 per cent of GDP, increased by an annualised 69.5 per cent from the second quarter. Investment as reflected by gross fixed capital formation, grew 26.5 per cent.
Getting back to pre-pandemic output levels will take time because “sharply lower investment this year by both public and private sectors will weigh on growth prospects in coming years,” the central bank said last month.
The rand gained 0.4 per cent to 15.0853 against the dollar by 11:55am in Johannesburg, having earlier reached the strongest level since February.