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Economic growth still bouncing from low lockdown base

10 March 2021 Momentum Investments
Johann van Tonder, Economist at Momentum

Johann van Tonder, Economist at Momentum

Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments

Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments

Highlights:
• 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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