SA economy grew 66% in third quarter as lockdown restrictions eased

South Africa's economy showed a remarkable rebound in the third quarter, with GDP rising at an annualised rate of 66 per cent. This surge in economic activity was largely driven by positive growth in all industries, including manufacturing, mining, and trade. Tatiana Lysenko, Lead Economist for Emerging Markets at S&P Global Ratings, joined CNBC Africa to provide insights into the surprising turnaround and its implications. Lysenko highlighted that the recovery in South Africa mirrored global trends, where countries are bouncing back from the deep economic decline experienced during the height of the pandemic. She noted that while the growth numbers were impressive, the economy has not fully recovered to pre-pandemic levels, with output still below by about 6%. This places South Africa in the middle of the pack compared to other emerging markets, some of which have already exceeded pre-pandemic levels. One of the key drivers of South Africa's recovery has been its close ties to China, with exports and industrial sectors leading the way. The resilience in mining and stronger-than-expected consumption have been positive surprises, indicating a more optimistic outlook for the economy. Looking ahead to 2021, Lysenko remains cautiously optimistic, projecting a 3.6% growth for the country. However, she warns that structural weaknesses and rising debt levels could impede a sustained recovery. The availability and distribution of a safe vaccine will be crucial in supporting domestic demand and boosting consumer confidence. Despite the positive momentum, Lysenko emphasizes the need for South Africa to address long-standing challenges and create a stable growth trajectory. The country's foreign currency rating will continue to be influenced by its growth and fiscal positions, which were weak even before the pandemic. Lysenko underscores the importance of long-term growth sustainability and structural reforms to overcome existing obstacles. In conclusion, South Africa's third-quarter economic performance signals a strong rebound, but challenges lie ahead in navigating the path to sustained growth and stability.