The Real Economy Bulletin - Third Quarter 2020

Main Bulletin: The Real Economy Bulletin - Third Quarter 2020

In this edition

Gross domestic product:  In the third quarter of 2020, the GDP recovered 13.5% after the extraordinary downturn that led to an overall decline of 16% in the second quarter. As a result, although quarterly output was still at levels last seen in 2016, it was on track to do better than most forecasts. The biggest risk to the recovery in the short run remains a second wave of COVID-19 as a result of socialising and travel over the holiday season. Read more.

Employment: The rebound in employment lagged behind the recovery in production in the third quarter. Job losses have been highest for the working poor outside of agriculture – that is, lower paid formal workers, informal entrepreneurs and employees, and domestic workers. In contrast, formal managers and professionals have seen only marginal job losses, in part because they can more easily work from home. Employment in manufacturing saw a sharper decline in the second quarter and a slower recovery than the rest of the economyRead more.

International trade: South Africa saw a strong recovery in its exports, especially gold, platinum and autos, in the third quarter. In contrast, imports remained subdued, mostly because of a combination of low petroleum prices and demand. These trends resulted in the highest balance-of-trade surplus since the transition to democracy. Read more.

Investment: The slowdown and uncertainty from the pandemic led to a near stand-still in investment by both private and state-owned companies. Since production recovered more strongly, investment fell to 16% of the GDP in the third quarter of 2020, its lowest level in almost 20 years. The latest available data on profitability suggest that manufacturing returns sank to almost zero in the second quarter, although other sectors did somewhat better. Read more.

Foreign direct investment projects: The TIPS FDI Tracker tracks foreign direct investment projects on a quarterly basis, using published information. Eleven projects were recorded this quarter, and the status and activities of four companies were updated. The total value of new investments recorded was approximately R6.2 billion from seven projects that reported a figure. Compared to the second quarter, the third quarter had more activity as lockdown regulations eased. Some companies have changed their plans as a result of the pandemic, however. Read more.

Briefing note: The global climate change regime and its impacts on South Africa’s trade and competitiveness: Overall, the rise of the global climate change regime has deep implications for South Africa’s exports. On the one hand, South African sales are at risk from measures aimed at curbing trade in carbon-intensive goods as well as imports from carbon-intensive jurisdictions. On the other, with the rise of the international climate change regime, greenhouse gas (GHG) emissions have emerged as a new commodity. They can effectively be traded between countries through the import and export of products and services, when emissions are “embodied” within products.Read the briefing note online: The global climate change regime and its impacts on South Africa’s trade and competitiveness.