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<p><strong>By:</strong> <b>Sanisha Packirisamy, Economist at Momentum Investments </b><strong>and</strong><b> Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments</b></p>

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<h3>Commentary on the Gross Domestic Product from the Momentum Investments Macro Research Desk</h3>

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<p><strong>HIGHLIGHTS:</strong></p>

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<ul><li>Real gross domestic product (GDP) declined by more than expected by 1.4% in quarter-on-quarter seasonally-adjusted (q/q saar) terms in the final quarter of 2019 and was 0.5% weaker in year-on-year (y/y) terms.</li><li>Consequently, GDP for the full year surprised to the downside at 0.2% relative to consensus expectations of 0.3%. Fragile economic activity in 2019 represented the weakest growth rate since the global financial crisis.</li><li>GDP declines for two consecutive quarters at the back end of 2019, raisin a technical recession, with little to suggest that growth will recover strongly in the first quarter of 2020.</li><li>The financial services sector was the largest contributor to growth (production stack-up) in the final quarter of 2019, while dismal activity levels in the transport and trade industries detracted the most in the same period.</li><li>A large inventory drawdown and a continued collapse in quarterly growth of fixed investment detracted from the quarterly growth number (expenditure stack-up), while household spending and exports contributed to growth.</li><li>Growth I SA’s growth indicator has bottomed out, but remains uninspiring. Continued load shedding in the first quarter of 2020 and supply chain disruptions triggered by an outbreak of the coronavirus are likely to weigh negatively on growth in the first quarter of 2020.</li><li>An unexpected delay in the normalisation of global supply chains and continued load shedding in light of the Eskom maintenance programme has led us to downgrade our growth view from 0.8% for 2020 to less than 0.5%.</li></ul>

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<p><strong><a href="https://www.cover.co.za/wp-content/uploads/2020/03/GDP-commentary-04-March-2020.pdf">To download the full GDP commentary report in PDF, click here</a></strong></p>

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