GDP increases by 66.1% in the third quarter

Miners R 2 1 - GDP increases by 66.1% in the third quarter

Output in the economy bounced back in the third quarter from the deep contraction in the second quarter.

Statistics South Africa data shows that Gross Domestic Product (GDP) in the third quarter increased by 66.1% at an annualised basis, stronger than market expectations.

It bounced back from the 51% quarter-on-quarter annualised contraction in the second quarter.

This is largely as a result of the easing of the COVID-19 lockdown restrictions, allowing for more business activity.

The largest contribution to the increase came from mining, manufacturing, trade and construction output.

Interpreting the rebound

Stats SA says the surge in economic activity in the third quarter may seem impressive, but it comes off the very low base recorded in the second quarter.

South African industries still have a long way to go before reaching levels of production seen before the pandemic.

Despite the rebound, the economy is still 5.8% smaller than it was at the end of 2019.

Manufacturing, trade and mining were the biggest drivers of growth in the third quarter. The manufacturing industry rose at an annualised rate of 210.2%, mostly driven by increases in the production of basic metal products, petroleum, vehicles, and food and beverages

Trade

Trade was the second biggest positive contributor to growth, increasing at an annualised rate of 137.0%. There was a rise in wholesale, retail and motor trade sales, supported by increased consumer spending.

The jump in mining activity was driven mostly by increased production of platinum group metals, iron ore, gold and manganese ore. The industry was also supported by a rise in exports.

Despite all industries recording positive results in the third quarter, agriculture and government are the only two that have so far weathered the effects of the pandemic.

Comparing the level of economic activity in the first three quarters of 2020 with the first three quarters of 2019, which are not annualised, agriculture has grown by 11.3% while government is marginally up by 0.8%.

All other industries are down, with construction down by -20.0%, transport and communication down by -15.6%, and manufacturing down by -14.9% the worst affected.

Below is the full GDP report from Stats SA:

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