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South Africa’s GDP grew by 1,1% in Quarter 1 of 2021, translating into an annualised growth rate of 4,6%.

Mining and finance recorded the highest growth rates, says Statistics South Africa.

RELATED: ‘South Africa’s economy is doing better than we all anticipated’

While the economy grew at a faster rate than expected, it is still 2.7% smaller than it was a year ago.

Bruce Whitfield interviews Professor Adrian Saville, CEO of Cannon Asset Managers.

There is recovery going on. It takes the shape of what we call a dead cat bounce – that there’s a base effect and all that makes for a nice buoyant-looking print of almost 5% economic growth.

Prof. Adrian Saville, CEO – Cannon Asset Managers

However, we need to keep in mind that our economy shrunk much more last year than the world economy.

South Africa has fallen further and is recovering slower says Prof. Saville.

The world economy shrunk 5%, we shrunk 7% and it’s anticipated the world economy will recover by something like 6% this year. It doesn’t look like South Africa is dressed up for that party.

Prof. Adrian Saville, CEO – Cannon Asset Managers

It’s likely that it will be somewhere around 2024 by the time we get back to 2019 size of economy. That is a very long, slow and anaemic recovery.

Prof. Adrian Saville, CEO – Cannon Asset Managers

You have to keep in mind that whilst the economy is taking its sweet time to recover, population growth continues to march along at 1.5 or 2% per annum, so you’ve got an economy that’s losing its size relative to the population… meaning that the ability to absorb jobs, provide revenue, build infrastructure, is spread ever thinner.

Prof. Adrian Saville, CEO – Cannon Asset Managers

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There are some things going right, he agrees.

These include “small pockets” that are doing well, like the agricultural sector for instance.

The substantial recovery of the rand is another positive that he highlights.

When we were speaking this time last year the rand was at 18 and 19 to the dollar and we’ve had substantial recovery… That buoyant mood for emerging markets helps the rand, it helps the issuing of bonds, and it will support our case for fiscal consolidation and for going into fiscal markets as a government.

Prof. Adrian Saville, CEO – Cannon Asset Managers

Listen to the response of Professor Saville and various industry experts to the GDP figures in the audio below: