In a latest Real Economy Bulletin, Trade & Industrial Policy Strategies (TIPS) finds that gross domestic product (GDP) has bounced back significantly since May, following the hard lockdown imposed in April.
While GDP shrank by 16% in the second quarter of the year, seasonally adjusted but not annualised, TIPS says GDP has recovered to near pre-pandemic levels by September.
GDP in the second quarter of the year declined by 51% on a seasonally adjusted annualised basis.
“Using private transactional figures which TIPS uses to track the impact of the pandemic on the economy, the data indicates that GDP declined very sharply in April, when the economy was in lockdown, but began to recover in May and, by September, had recovered to near pre-pandemic levels,” the organisation states.
Senior economist Neva Makgetla says it is interesting to compare South Africa’s recovery in relation to other countries included in Organisation for Economic Cooperation and Development data.
“These figures show that South Africa came in at the lower end for GDP decline in the pandemic, after India, the UK, Spain and Mexico and slightly worse than Columbia, Hungary, Greece and Portugal.
“In terms of South Africa’s recovery, much will depend on the recovery of its main trading partners such as the UK, Germany, the US and Japan, all of which shrank by at least 8% in the second quarter.
“In the case of China, its economy had already recovered in the second quarter and it is expected to grow slightly in 2020,” Makgetla notes.
Aside from the recovery of its trading partners, addressing the challenges around electricity supply will be critical for growth, as will working with stakeholders to address some complex economic challenges, for which there are no easy or cheap solutions, TIPS points out.
The bulletin published by TIPS looks at what is happening in the different sectors with a particular focus on the impact of tourism's headwinds, especially in terms of economic recovery in the Western Cape.
The bulletin also touches on employment levels, international trade, investment and foreign direct investment projects as well as exploring how to stimulate consumer spending post Covid-19.