GDP UP - HOW'S THAT?

After four consecutive declines, SA's economy grew at an annualized rate of 66,1 percent in the third quarter of 2020, says Statistics SA. Myles Wakefield, CEO of Wakefields Real Estate, believes property is playing its part in bringing the country out of the doldrums.

It feels as the universe is not only constantly springing surprises on us, but often slightly inexplicable ones. The buoyancy in the property market was one such surprise after the hard lockdown.

GDP figures are not only up, but much higher than expected. The strongest pace of inflation since at least 1993, says the macroeconomics website Trading Economics.  They report that the consensus had been 52,6 percent, and they were  way out.

Maarten Ackerman writing for Fin24 confirms that: "The 66 percent quarter on quarter, seasonally adjusted, annualised figure, is better than even the best industry expectation." Clearly, it's been a positive surprise, well received by the market...proven by the positive movements in the rand exchange rate, and the bond market.

So, what's the reason? According to Ackerman, three things: growth was measured off a very, very low base - GDP more than halved in the previous quarter. Secondly, it's not only SA which has opened up, but our trading partners and the rest of the world too - that's given us impetus.

And thirdly, the lack of load shedding, aka Eskom not putting a handbrake on the economy.

Realistically of course, we'd need four straight quarters of figures like these, in order to claim 66 percent GDP growth. It's very unlikely to happen, and certainly not expected, but as Myles Wakefield, CEO of Wakefields Real Estate says, "This growth is still really good news, and we should be encouraged by it. Key sectors of the economy are doing surprisingly well, with a positive double digit contribution from Mining, Manufacturing and Trade as global trade opened and these industries returned to business after lockdown. Agriculture, too, has shown good, strong growth. On the consumption side of the economy - as the world returned to business - the export sector was the biggest contributor.

"But," he says, "let's not ignore the contribution of the property sector. Nobody expected property to rebound as it did when lockdown protocols were lifted, but it did. Yes, the very low interest rate and an increased willingness by banks to grant loans were factors, but one factor that's always difficult to enter into the equation is market sentiment. Sentiment is a major player in many sectors, but very much so in that of property.  A number of our branches throughout KZN are experiencing stock shortages, a good indicator of demand. South Africans are buying and selling property at a healthy rate, which implies a positivity that flies in the face of the scaremongering and negative talk."

He added, "Nobody is expecting dramatic GDP growth figures in 2021, but - with the proviso we don't have any untoward political or global curve balls or incidents - next year is viewed as a consolidating one. A stabilising year, one which will be spent examining and attending to infrastructure, securing a stable service from our power utility, cleaning up our act...creating a solid platform from which growth can take place in 2022."

The figures are unlikely to continue their rosy hued trajectory, but up is up, and it looks likely that we're heading in the right direction.

Wakefields says, "It's great news that our world looks better than expected. We can certainly confirm that at Wakefields, the buoyancy of the property market took us as much by surprise as the welcome GDP figures. And it's continuing to look strong. If we, as a country, can continue, even slowly, on this path, we can start addressing some of our major challenges like unemployment once the economy is looking healthier."