SA’s economic growth is now expected to slow in the first quarter
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SOUTH Africa’s economic growth is expected to have slowed in the first quarter of 2021 as lockdown restrictions and power supply challenges continued to plague activity.
Statistics South Africa (StatsSA) will tomorrow release the results of the gross domestic product (GDP) for the first quarter of 2021 following significant growth in the last quarter of 2020.
Real GDP increased at an annualised rate of 6.3 percent in the fourth quarter of 2020, driven by the manufacturing sector, as further easing of Covid-19 lockdown restrictions boosted consumer buying power.
However, recent unemployment figures showing that 32.6 percent, or 7.2 million people, were without jobs in the first quarter have cast doubt over the economy’s ability to grow at a required pace at which it can create jobs.
Data from StatsSA, last week, showed that 8 000 more people joined the ranks of the unemployed between January and March, this year, raising the unemployment rate to 32.6 percent. This was the highest unemployment rate since 2008 during the global financial crisis, following the collapse of the US sub-prime market.
The official unemployment rate among youth was 46.3 percent in the first quarter, with the rate remaining an elevated 9.3 percent among university graduates.
FNB chief economist Mamello Matikinca-Ngwenya said economic growth, likely moderated in the first quarter relative to the fourth quarter, but most likely avoided a double-dip recession.
Matikinca-Ngwenya said they expected seasonally adjusted real GDP to have posted growth of 2.4 percent quarter-on-quarter annualised in the first quarter from 6.3 percent.
“Economic growth in the first quarter was largely supported by the primary sector and the trade sector,” said Matikinca-Ngwenya.
“Still, the economy’s real GDP is likely to have been around 4 percent lower in the first quarter of 2021, relative to the first quarter of 2020,” she said.
Last month, the SA Reserve Bank (SARB) expressed optimism over the economic outlook. The SARB said growth was now expected to expand to 4.2 percent in 2021, up from 3.8 percent, despite the threat of a third wave of Covid-19.
However, Investec is forecasting a growth outcome of 3.9 percent for 2021, as the quickening in global growth and the commodity boom sees positive knock-on effects for South Africa.
Investec economist Kamilla Kaplan said the first quarterly GDP growth rate
would likely be slower than that of the fourth quarter of 2020.
Kaplan also forecast that growth could have slowed from 6.3 percent to 2.3 percent quarter-on-quarter to the end of March, amid restrictions on some industries during the country’s
second wave of infections, at the turn of the year. “Advance indications provided by high frequency economic releases, suggest that much of the quarter-on-quarter moderation in GDP, is expected to be derived from slower activity in the manufacturing and
trade sectors,” Kaplan said.
“Some of this effect should be countered by an improved performance in the mining sector that gained support from increased global industrial demand and higher commodity prices.”