South Africa’s economy showed it was recovering following the blow it has taken from the Covid-19 crisis.
Stats SA says gross domestic product (GDP) grew 1% in the first quarter of 2021 translating into an annualised growth rate of 4.6%.
The statistics agency says finance, mining, and trade industries were the main drivers of output on the production side of the economy, while household spending and changes in inventories helped spur growth on the demand side.
Though this rise is the third consecutive quarter of positive growth, the South African economy still has some way to go to fully recover as it remains 2.7% smaller than it was in the first quarter of 2020.
Real GDP was R782 billion in the first quarter of 2020. In the second quarter, when lockdown restrictions were at their most stringent, economic output slumped to R652 billion. Economic activity has since increased, in line with easing lockdown restrictions, and real GDP has since risen to R761 billion in the first quarter of 2021.
“This level is roughly comparable to what the economy was producing in the first quarter of 2016 and is 2.7% down from the R782 billion recorded in the first quarter of 2020”.
Despite having a long way to go, the recovery is still widespread as eight of the ten industries recorded positive gains in the first quarter.
Stats SA says the growth in the finance sector was driven largely by strong activity in the property sector.
“Economic activity in the finance, real estate, and business services industry increased at an annualised rate of 7.4%. This was mostly driven by property services, recording a rise in mortgage advances and bond registrations, and the banking sector, registering a rise in the number of credit extensions.”
The mining sector also had a positive quarter with annualised growth of 18.1%. It was boosted by the production of platinum group metals, iron ore, gold, and chromium. The recovery in the sector was not widespread as miners in manganese ore, coal and diamonds recorded lower production figures.
Household spending increased at an annualised rate of 4.7% with 10 out of 12 sectors showing increases. This growth was driven largely by spending on miscellaneous goods and services, clothing and footwear, furnishings, household equipment and maintenance.
There was impressive growth in the clothing and footwear sector, which rose at an annualised rate of 22.2%. Stats SA says there was also notable growth in “insurance-related products, as well as retail goods such as electrical appliances, jewellery and other personal effects”.
The two sectors that showed declines in household spending were transportation and restaurants and hotels.