South Africa: GDP returns to growth in the final quarter of 2021
The economic recovery regained momentum at the tail end of 2021, with GDP expanding 1.2% in seasonally-adjusted quarter-on-quarter terms in Q4, rebounding from the 1.7% decline recorded in the previous quarter. Meanwhile, on an annual basis, GDP growth moderated to 1.7% from Q3’s 2.9%, as the favorable base effect eased further. Consequently, GDP swung to a 4.9% expansion in 2021 as a whole, partly recovering from the 6.4% contraction logged in 2020.
Domestically, the quarterly upturn was largely due to private consumption returning to growth (Q4: +2.8% s.a. qoq; Q3: -2.4% s.a. qoq) as consumption of durable and semi-durable goods increased. Moreover, fixed investment swung from contraction to growth in Q4, coming in at a seasonally-adjusted quarterly 1.9% (Q3: -0.4% s.a. qoq) amid higher spending on machinery and equipment. This more than offset government spending growth slowing to 0.1% in Q4, down from the 0.2% expansion recorded in the previous quarter.
Turning to the external sector, exports of goods and services bounced back, increasing 8.5% over the previous quarter in Q4, contrasting the 7.6% decline logged in Q3. Similarly, imports of goods and services grew 8.9% compared to the prior quarter (Q3: -3.4% s.a. qoq). Consequently, the external sector did not contribute nor subtract from the overall growth, marking an improvement from the prior quarter’s 1.1 percentage point detraction.