SA’s economy will expand 3.9% next year – poll

The South African economy will expand 3.9% next year after contracting nearly twice that rate in 2020, a Reuters poll found on Thursday, after a strong third quarter performance likely ease this year’s estimates.

The country’s performance rebounded strongly last quarter as coronavirus restrictions were relaxed, with mining and manufacturing leading an expansion across all sectors.

This quarter’s seasonally adjusted, annualised growth is expected to be 4.4% after the economy expanded 66.1% in July-September. It shrank 51.7% in the second quarter as coronavirus lockdowns stalled activity, official data showed.

Growth is likely to be around 2.0% early next year, the poll showed.

Having slumped due to government Covid-19 related restrictions imposed since March, the poll conducted in the past week suggested the economy would contract 7.4% this year and take some time to fully recover, growing 3.9% next year.

However, that was better than medians in last month’s poll which showed the economy would contract 8.2% in 2020 and expand 3.0% next year.

“The (Q3) upside surprise also technically lifts 2021 year-on-year growth by almost as much, yet the impact on the 2021 forecast will be pared down by a likely softer first quarter,” said economists at JPMorgan.

The South African Reserve Bank was expected to keep interest rates steady at 3.5% next year, but raise interest rates 50 basis points to 4.0% in 2022. Inflation was expected to quicken next year to 3.9% from 3.3% this year.