Economic News

GDP Bounces Back, Inflation and Job Woes Linger

Published by
WIlliam Dube
  1. GDP partially recovered in Q4 2021, growing 1.2% after a 1.7% contraction in Q3, but still remains below pre-pandemic levels.
  2. The unemployment rate increased to 35.3%, with 143,000 new formal sector jobs created, far from the 571,000 lost during Q3.
  3. Inflation concerns led to a repo interest rate hike of 25 basis points to 4.25%, with consumer inflation forecasted to rise from 4.9% to 5.8% due to higher food and fuel prices.

The Bureau of Economic Research (BER) recently published its “Economic Snap Shot” report, providing valuable insights into the economic state of the nation. The report reveals that GDP partially recovered from its Q3 setbacks, expanding by 1.2% (seasonally adjusted) in the fourth quarter of 2021. This growth, however, did not fully compensate for the 1.7% contraction experienced in Q3 due to the COVID third wave and the July riots.

Sectors such as agriculture, manufacturing, trade, transport, and personal services expanded on a quarterly basis, while mining, electricity, construction, government, and the financial sector contracted. From the demand side, higher household consumption expenditure, increased exports, and an uptick in fixed investment contributed to the growth. Despite this expansion, GDP remains 1.9% below pre-pandemic levels observed in 2019 Q4.

The partial GDP recovery in Q4 2021 led to the creation of 143,000 formal sector jobs, raising the total to 9.77 million. However, this figure pales in comparison to the 571,000 formal jobs lost in Q3 due to the July riots and looting. The unemployment rate increased to 35.3% in the fourth quarter, as more people rejoined the labor force.

Domestic inflation has been driven by rising energy costs, in line with the international situation. Headline consumer inflation reached 5.7% year-on-year in February, marking the tenth consecutive month above the midpoint (4.5%) of the Reserve Bank’s target band. Food prices also saw a significant increase of 6.9%, contributing to the higher rate. However, annual inflation was somewhat tempered by actual rentals for housing and their owner’s equivalent, which increased by only 1.1% and 1.8%, respectively.

In response to inflation risks, particularly the war in Ukraine, the Reserve Bank raised its forecast of consumer inflation this year from 4.9% to 5.8% in March, primarily due to higher food and fuel prices. The Bank’s Monetary Policy Committee (MPC) remains concerned about inflation expectations, which rose again in the first quarter of 2022. Consequently, the MPC hiked the repo interest rate by 25 basis points to 4.25% (with a prime rate of 7.50%).

In summary, the nation’s economic recovery is progressing, albeit hindered by inflation and unemployment concerns. The partial rebound in GDP and job creation is a positive sign, but the economy has yet to return to its pre-pandemic state. The Reserve Bank’s actions to address inflation risks highlight the challenges faced in steering the economy towards sustainable growth.

Key Economic Indicators

IndicatorQ4 2021Q3 2021Change
GDP Growth1.2%-1.7%+2.9%
Unemployment Rate35.3%(Not provided)(Not provided)
Formal Sector Jobs9.77 million(Not provided)+143,000
Consumer Inflation (YoY)5.7%(Not provided)(Not provided)
Repo Interest Rate4.25%(Not provided)+25 bps
A summary of key economic indicators in Q4 2021 compared to Q3 2021.

Inflation Factors

FactorFebruary 2022Annual Change
Energy(Not provided)(Not provided)
Food Prices6.9%(Not provided)
Housing Rentals1.1%(Not provided)
Owner’s Equivalent1.8%(Not provided)
Factors contributing to inflation in February 2022.
WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on

Published by
WIlliam Dube

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