Despite South Africa’s economy emerging from hard lockdown, the sustained negative effects of the Covid-19 pandemic continues to wreak havoc on economic growth.
This time last year the country’s gross domestic product (GDP) decreased by 2%, continuing the recessionary trend .
According to Statistics South Africa (StatsSA) the economy grew by 1.1% in the first quarter (January to March). This translates to an annualised growth rate of 4.6%.
As encouraging as the news is that the economy is growing, StatsSA said the economy is 2.7% smaller than it was in the first quarter of 2020.
Last year, one of the hardest hit sectors was mining and quarrying, which fell by 21.5%, followed by the manufacturing industry, which saw an 8.5% downward trend.
This year, the mining industry grew by 18.1%, boosted by the production of iron ore, gold and chromium. However, StatsSA said manganese ore, coal and diamonds recorded lower production figures in the first quarter.
Manufacturing saw an annualised growth of 1.6%, which StatsSA attributed to a growth in motor vehicle production and wood, paper and printing, boosted by a substantial increase in newspaper sales.
Electricity, gas and water industries contracted by 5.6% in the first quarter of last year, while construction contracted 4.7%.
In 2021, electricity, gas and water, marred by load shedding, shrunk by 2.6%. Construction rose slightly, by 0.8%.
Many industries proved resilient, despite intense lockdown restrictions last year.
Finance, real estate and business services grew by 3.7%. In 2021, the sector increased at an annualised rate of 7.4%, mainly driven by property services and the banking sector. In the banking sector, StatsSA said there was a rise in the number of credit extensions.
Increases were also recorded in the agriculture, forestry and fishing industry last year, which increased by a significant 27.8%. This industry did not enjoy the same increases this year, with agriculture shrinking by 3.1%.
How long until our economy ‘normalises’?
Despite significant disruptions attributed to the Covid-19 pandemic, real GDP rose to R761 billion in the first quarter this year.
StatsSA said this is “roughly comparable” to how the country’s economy was performing in the first quarter of 2016, and just 2.7% down from the R782 billion in the first quarter of 2020.
The biggest slump so far, owing to Covid-19, was during the second quarter of 2020, with economic output decreasing to R652 billion.
This means that economic hardships as a result of the pandemic are showing signs of recovering.