Stats SA announced today that the economy grew just 1.2 percent in the 2nd quarter of the year, compared to the previous quarter, as the economy struggles to reach anywhere near pre-pandemic levels. While the newly benchmarked figures were slightly better than expected (compared to a Bloomberg poll, the consensus was around 0.9 percent), the level the economy is currently operating at in terms of production/consumption is around 2017 levels in real terms, which is extremely poor. Although the countries vaccination drive has gained momentum over the last month or so, it has been lacklustre if we compare vaccination rates to peer countries, which is significantly hindering growth of the economy, as various restrictions under various lockdown levels persist, and are expected to persist until the majority of the country is fully vaccinated.
The figures were of course much better than the same quarter last year (2020Q2), which was the worst quarterly performance by the economy on record, due to the hard lockdown over this period. The economy rebounded by 19.3 percent y-y, but this is of course coming off an extremely low base.
There were some positive developments to report on, in none other than the agricultural sector, who again saw record crop harvests in the 2nd quarter. Favourable weather conditions, as well as robust demand from export countries contributed to the good figures. The agricultural sector saw growth of 6.2 percent in the 2nd quarter, q-q, seasonally adjusted, in constant 2015 prices. The best performer in the quarter was the transport and communication sector, with growth of 6.9 percent. Other tertiary sectors were also improved in the 2nd quarter, notably wholesale and retail trade, and spending on personal services.
The construction sector again got the short end of the stick and was once again the worst performing sector in the economy, looking at the figures from the production side, with a decrease in growth of 1.4 percent, off the back of growth of 0.5 percent in the first quarter. This comes as there was less investment in all types of construction, notably non-residential buildings, which saw 2.0 percent less investment compared to the previous quarter, while there were decreases of 0.2 percent and 1.8 percent in residential buildings and civil construction respectively.
Over the last 12-month period, the economy has grown just 1.1 percent, and depending on how the economy performs in the 3rd and 4th quarter, growth forecasts of 3.0 percent for 2021 as a whole, could be difficult to reach.
Please note our previous update, with regards to the rebasing and benchmarking of the GDP figures, which found the economy to be 11 percent bigger in nominal terms – it didn’t however change growth rates much, with Stats SA announcing a 0.1 percent revision for the 1st quarter of 2021. Importantly however, the new manner in which Stats SA does the benchmarking found civil construction investment to be around R40bn lower each year for the last five years. We are undergoing a full review of the figures, which will be updated in our forecast report at the end of the month.
