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1.5% slump in economy for Q3 due mainly to July looting, lockdown restrictions

7 December 2021 7:54 PM
Tags:
GDP
The Money Show
Stats SA
Economic growth
Bruce Whitfield
Kevin Lings
Lockdown
COVID-19
economic recovery
civil unrest
July riots

The Money Show's Bruce Whitfield interviews Kevin Lings (Stanlib Asset Management) about the latest GDP numbers.
South Africa has the third-largest and most-developed economy in Africa. © alexlmx/123rf.com

The South African economy contracted by 1,5% in Quarter 3 of 2021 (July-September).

Statistics South Africa released the latest Gross Domestic Product (GDP) numbers on Tuesday.

The bigger-than-expected slump in GDP following four consecutive quarters of growth was due largely to tighter Covid-19 lockdown restrictions and the July unrest.

Stats SA says six of the ten industries recorded a decline in production in the third quarter, with agriculture, trade and manufacturing the hardest hit.

Bruce Whitfield asks Kevin Lings (Chief Economist at Stanlib Asset Management) to explain significance of the 1.5% drop in GDP in the third quarter.

It simply means that over the three months the economy is smaller than it was the three months' prior to that.

Kevin Lings, Chief Economist - Stanlib Asset Management

1.5% doesn't sound like much but in economic terms that's huge, especially when you're expecting the economy to expand and especially when there are more and more people entering the labour market and the population is growing...

Kevin Lings, Chief Economist - Stanlib Asset Management

At any point when your economy declines, it's always problematic... so this we would regard as a very significant decline given that we're not even back to the level of economic output that existed before Covid.

Kevin Lings, Chief Economist - Stanlib Asset Management

As all economies come under pressure [with Covid], all economies try to claw back that lost output. Some economies have done very well... the US economy is now the biggest it's ever been... We haven't been able to claw back and expand and now we've gone down another 1.5% relative to where we were three months ago.

Kevin Lings, Chief Economist - Stanlib Asset Management

At its last meeting the Reserve Bank made a forecast of a possible growth rate of 5% this year.

How does that fit into the picture?

For the year as a whole it's like the economy will now grow at less than 5%, coming down to around 4.7% says Lings.

We are anticipating positive growth in the final three months and that's partly to do with just getting past the looting, opening up the economy after the third wave and trying to generally get things going.

Kevin Lings, Chief Economist - Stanlib Asset Management

There are still headwinds... like the electricity outages and water outages, so it's not as if we're going to be roaring ahead...

Kevin Lings, Chief Economist - Stanlib Asset Management

We've clearly lost momentum in the second half of this year, but I'm hoping that at least we get a positive growth in the final quarter and then, critically, we need to try and build some momentum next year to at least claw back the ground we've lost.

Kevin Lings, Chief Economist - Stanlib Asset Management

Listen to Lings' analysis on The Money Show:


This article first appeared on CapeTalk : 1.5% slump in economy for Q3 due mainly to July looting, lockdown restrictions




7 December 2021 7:54 PM
Tags:
GDP
The Money Show
Stats SA
Economic growth
Bruce Whitfield
Kevin Lings
Lockdown
COVID-19
economic recovery
civil unrest
July riots

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