The SA Daily
04 September 2020
Deep damage to 2Q GDP
- The long-awaited Stats SA GDP data on Tuesday will confirm how deeply real GDP contracted in 2Q20. We forecast a contraction of 50% q/q seasonally adjusted and annualised. The Bloomberg consensus is for a contraction of 45% q/q seasonally adjusted and annualised; the forecasts range from 52% q/q to 30% q/q. The SARB forecasts a contraction 40.1% q/q.
- Our 50% q/q contraction for 2Q forecast implies a real GDP loss of R498bn in that quarter, to be reversed partially by the anticipated positive q/q growth in both quarters of 2H20. Still, based on our forecast of a GDP contraction of 8.5% for 2020, the economy would be worse off by R268bn in 2020 than in 2019. This is a stark number, compared to the R42bn loss in 2009 when South Africa’s GDP contracted by 1.5% due to the 2008/9 GFC (global financial crisis).
- The GDP of most countries would have contracted in 2Q20. US GDP shrank by an annualised 31.7% q/q in 2Q20; UK GDP contracted by 20.4% q/q; Canada GDP by an annualised 38.7% q/q; Germany by 9.7% q/q; France by 13.8% q/q and Japan’s GDP shrank by an annualised 27.8% q/q.
- In developing economies, Brazil’s GDP shrank by 9.7% q/q; the Philippines by 15.2% q/q; Turkey by 11% q/q; Chile by 13.2% q/q; Colombia by 14.9% q/q; Hungary by 14.5% q/q; Malaysia by 16.5% q/q.
- South Africa’s economic recovery, from both the pandemic and a wide range of longstanding and now entrenched domestic weaknesses, depends on government policy and reforms and sturdy electricity supply.
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