The Bureau for Economic Research (BER) warned yesterday that the 2020's fourth quarter GDP growth rate will most likely subside after it soared in the third quarter due to the poor performance of especially hotels, restaurants and business services. Picture: Henk Kruger/African News Agency (ANA)
The Bureau for Economic Research (BER) warned yesterday that the 2020's fourth quarter GDP growth rate will most likely subside after it soared in the third quarter due to the poor performance of especially hotels, restaurants and business services. Picture: Henk Kruger/African News Agency (ANA)

SA economy struggled in 2020 Q4 due to lockdown measures

By Siphelele Dludla Time of article published Jan 20, 2021

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JOHANNESBURG - The Bureau for Economic Research (BER) warned yesterday that the 2020's fourth quarter GDP growth rate will most likely subside after it soared in the third quarter due to the poor performance of especially hotels, restaurants and business services.

This is despite the Other services confidence jumping from 17 points in the third quarter to 27 points in the final quarter of 2020.

The BER said the fourth quarter finding of 27 indicated that more than 7 out of 10 participants were unsatisfied.

It said though the 10-point jump was encouraging, conditions were still far from favourable in the other services sector as confidence was lower than the 34 recorded the year before.

The economy continued to struggle in the fourth quarter of 2020 as the government reimposed some of the lockdown measures that were lifted when new Covid-19 cases subsided.

Sectors such as the hospitality and tourism industries were the hardest hit as the curfew and alcohol ban forced restaurants to close early, while closure of beaches restricted tourists destinations.

“Although the lifting of the inter-provincial leisure travel ban and the reopening of international travel led to some improvement relative to the third quarter, activity was nevertheless down across the board relative to a year ago,” BER said.

“The performance of restaurants followed the same course as that of tourism accommodation.”

Data from Statistics South Africa on Monday showed that the total income for the tourist accommodation industry fell by 65.5 in November 2020 from a year ago.

Investec’s Lara Hodes said the performance was still likely to be notably down as the financial effects of the pandemic on consumers had been unprecedented.

“A second, marked spike in infection rates, necessitating a move back to an adjusted level three lockdown and a renewed ban on alcohol sales, will once again likely slow the pace of recovery of the tourism and its allied sectors,” Hodes said.

“A hastened, effective vaccination rollout, coupled with strong support from the government, as indicated in its reconstruction and recovery plan, is vital to revive and propel forward this essential sector.

In 2019, the other services sector was responsible for 22 percent of gross domestic product (GDP).

The BER said that the poor performance of especially hotels, restaurants and business services provide further support for the view that the fourth quarter GDP growth rate will most likely subside after it soared in the third quarter.”

“From the perspective of preserving livelihoods, the prolonged reduction in employment at hotels, restaurants and business services is most worrisome,” it said.

BUSINESS REPORT

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