The Department of Statistics South Africa (Stats SA) has recently released the Gross Domestic Product (GDP) figures for the final quarter of 2020, which offered a sobering overview of the year. The South African economy grew by an impressive 6,3% in the final quarter of 2020 – despite the second wave of Covid-19. For the year as a whole, the local economy declined by -7%, which admittedly was better than most forecasts.
Almost every sector recorded positive growth in the final quarter of 2020, with the mining and finance sectors, respectively, the exceptions. The one shining star was the agricultural sector, which recorded a 5,9% growth in the fourth quarter, at the back of increased production of animal products, according to Stats SA. The sector’s year performance flourished, as expected, coming in at 13,1% in 2020.
The impressive performance was attributed to a few known factors, which include but are not limited to, favourable weather conditions (as we have seen the La Niña climatic event play out) and, to a large degree, the classification of the sector as an essential service from the initial lockdown restrictions. That allowed for production to continue as most of the economy came to a halt.
Further to this was the good performance across sub-sectors, from the second-largest grain harvest, to impressive performance of horticulture, led by citrus exports, and the recovery in the livestock industry.
Looking forward
While the overall economy still remains in the doldrums, the past year presented a real life experiment on many aspects and has now gifted us with data that shows that, amongst other things, the agriculture sector remains the beacon of hope in tackling many of the ailments in the economy.
The data shows that, with the correct policy regime and collaboration, the sector still remains a low hanging fruit to kick start the economy. This should serve as a wake up call for government to ‘suit the action to the word, the word to the action’ – to quote from Hamlet by Shakespeare.
Looking forward, much of the risks in the system lie in the speedy implementation of correct policies, which underpin realising the growth potential. Favourable weather conditions are still with us and the production outlook remains positive. This lays a good foundation for another positive year for the sector, albeit softer, owing to base effects.
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