President Cyril Ramaphosa says that the 13.5% rebound in GDP during the third quarter of 2020 shows that a strong economic recovery is possible, even as the economy remains below its pre-pandemic levels.
The 66.1% GDP growth on an annualised basis in the third quarter surpassed even the most optimistic market expectations, with a surprisingly swift increase in economic activity as most restrictions designed to contain the spread of COVID-19 were lifted. Gross fixed capital formation also increased at a rate of 26.5%.
While GDP contracted 6% year-on-year, the President said the strong increase from the second quarter suggests that the economy is recovering more quickly than expected.
“In recent months, encouraging green shoots have emerged which provide a foundation for economic reconstruction and recovery. The mining and agriculture sectors in particular have demonstrated robust growth in the context of favourable market conditions.
“As a result of large trade surpluses, a record current account surplus is anticipated.
“Fast-growing sectors such as global business services have continued to expand and create employment at a rapid pace, showing new areas of potential for future growth,” said the President.
The swift rebound in the third quarter was supported by the tickle-up stimulus effects of the emergency relief package announced by the President in April 2020, which has included direct payments to over 22 million South Africans through additional grant payments, the Special COVID-19 Grant and the COVID-19 Temporary Employer/Employee Relief Scheme.
In addition, a strong recovery in economic activity was made possible by the country’s success in bringing the virus under control.
“The strong rebound in GDP growth for the third quarter provides support for the approach that we have taken both to confront the pandemic and to protect the economy.
“Our task now is to ensure that this momentum is sustained, to enable a full recovery of the economy,” said the President.
President Ramaphosa said a resurgence of the virus is now the single most serious threat to the economic recovery that is underway.
“As we move into celebrating the festive season and spending time with our families, we must remain vigilant to prevent a second wave,” he said.
The President called on all South Africans to wear a mask, keep a safe distance from others, avoid crowded or poorly ventilated spaces and wash hands regularly.
“These simple measures are necessary not only to protect ourselves and others, but to support the continued recovery of the economy,” said the President.