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Making Sense of the Marginal First-Quarter GDP Growth in SA



According the data released by statistics South Africa on Wednesday, as expected the economy showed  a marginal increase in output in the first quarter after the economy contracted the most in a century in 2020 because of the coronavirus pandemic. However, this increase must be seen as lower than expected gas a result of various other factors including fights within the ruling ACN and the gaps in leadership with the rolling out of Covid-19 Vaccines.

According to the data manufacturing and mining production, and retail sales rose slightly in the three months through March compared with the previous quarter. This was expected, given the lows of 2020 and the easing of restriction related to covid-19 in 2021. The country was at the so-called virus alert-level 3 for part of the first quarter after a second wave of Covid-19 cases, which means some economic activity was restricted.

Mining and manufacturing comprise almost a quarter of gross domestic product, while trade, which includes the retail sector, contributes 16%.

Marginal Uptick

South Africa’s economy recovery got off to a slow start

Source: Statistics South Africa

Statistics SA is scheduled to publish GDP data for the first quarter on June 8, when it’ll drop the focus on annualized growth and change the base year for the data to 2015 from 2010.

After shrinking 7% as the virus ravaged output and disrupted trade in 2020, the economy is expected to recover off the low base this year. The National Treasury sees expansion of 3.9% but only estimates GDP recovering to pre-pandemic levels in late 2023.

An anticipated third wave of Covid-19 infections and slow rollout of vaccines could lead to a reintroduction of stricter lockdown measures, while a resumption of rolling power outages may also curb the rebound. However,  high commodity prices and strong global economic prospects should offer some support,



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