Sign in
Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
FX Report
The Loop
Inside China
Insights & Strategy
Equities link-chevron Created with Sketch.
Corporate Commissioned Research
Analysts
Analysts
Help and Support
Help and Support
Corporate and Investment Bank
Standard Bank Group
The SA Daily 29 June 2020

Q1:20 GDP to disappoint

Shireen Darmalingam

  • Stats SA will release Q1:20 GDP tomorrow; we expect a contraction of 4.0% q/q (saar), after the decline of 1.4% q/q (saar) in Q4:19. Q1:20 will likely be the poorest q/q growth rate since the 2008/09 global financial crisis (GFC).
  • Q1:20 growth would have continued suffering SA’s longstanding underlying economic weakness rather than the COVID-19 pandemic. In Q4:19, there were still positive contributions to growth from the finance, real estate and business services industry as well as the mining and quarrying sector. The largest negative contributions then came from the transport, storage and communication industry and the trade, catering and accommodation industry.
  • Q2:20 economic growth however would have borne the brunt of shutdowns and restrictions related to widespread lockdowns; SA’s lockdown was implemented on 27 March. We foresee the deepest recession since the 1920s, and thereafter a protracted recovery back to the pre-pandemic real GDP level. For 2020, we pencil in a sharp contraction of 8.5%. This, alongside global economic weakness, elevated uncertainty and depressed sentiment, will weigh on SA employment and fixed investment. Note that SA’s unemployment rate increased to 30.1% in Q1:20; the Finance Minister recently said that this could rise as high as 50% (in a worst-case scenario).
  • Nevertheless, a recovery in economic growth to 6.5% is forecast for 2021; however, that would be contingent on policy reforms in the coming months and also on the severity of the pandemic’s impact here. SA now has 138,134 cases; 68,925 people have recovered from the virus. Still, the peak of new infections is only anticipated in Q3:20. Uncertainty and volatility in local markets will therefore likely stay high.

Read PDF