By: Johann van Tonder, Economist at Momentum and Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments.
- The South African economy contracted by 7% in 2020 compared to 2019.
- In the fourth quarter of 2020 the economy grew 6,3% quarter-on-quarter seasonally adjusted and annualised (q/q saa) following an upwardly revised 67,3% in the third quarter of 2020.
- Agriculture and general government were the only sectors that made positive contributions to economic growth in 2020.
- The manufacturing sector made the largest contribution to economic growth in the fourth quarter of 2020 (2,4 percentage points), followed by trade (1,3 percentage points).
- Company operating profits and household income recovered further in the fourth quarter.
- Measured from the expenditure side, the economy grew 6,5% in the fourth quarter of 2020 from an upwardly revised 68,1% in the third quarter.
- Exports, household expenditure and inventory accumulation contributed most to economic growth in the fourth quarter.
- Given the partial closure of the economy during the first two months of the first quarter of 2021, the quarterly growth rate is expected to level off.
- The outlook for 2021 is moderately promising at this stage, with growth of around 3,4% expected.
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