South Africa economy contracts 2% in Q1 2020

JOHANNESBURG, South Africa – The economy of South Africa, the continent’s most advanced, shrunk by 2% in the 1st quarter of this year, its 3rd consecutive quarterly decline, official statistics showed on Tuesday, June 30.

StatsSA said mining and manufacturing were the biggest drags on overall economic activity – with the mining and quarrying sectors shrinking by 21.5%.

The manufacturing industry contracted by 8.5%.

Agriculture, by contrast, “recorded a particularly good quarter” with 27.8% growth.

The figures provide only a glimpse of the economic impact of the coronavirus outbreak on South Africa as the shutdown of the country began only March 27, only days before the end of the quarter.

Overall, the economy is projected to shrink by 7.2% in 2020 as a result of the pandemic, the deepest slump in 90 years, Finance Minister Tito Mboweni said last week.

“The effects of COVID-19 are not only based on what stage we as a country instituted our lockdown,” Statistician-General Risenga Maluleke told a local radio station.

“When we kicked in with a lockdown, other countries had already instituted their travel restrictions and we can see it in some areas, especially…manufacturing [and] mining.”

South Africa has the highest recorded number of coronavirus infections in sub-Saharan Africa, with 144, 264 cases, including 2,529 fatalities.

‘Harsh’ lockdown

The government has been gradually easing the lockdown in phases, but the numbers of infections are climbing fast with the Health Minister Zweli Mkhize warning that the country is yet to reach its peak.

The economy had already slipped into its second recession in two years in the final quarter of 2019, before the virus arrived.

Unemployment also hit a record 30.1% in the 1st quarter of this year. Over 63% of the country’s 20.4 million job-seekers were aged between 15 and 34.       

President Cyril Ramaphosa has warned of “tough times” ahead as the country braces for the economic fallout of its anti-coronavirus measures.

Mboweni said the pandemic had pushed the country’s consolidated budget, including debt servicing costs, to record highs.

Inflation dropped to 3% in April from 4.1% in March – the lowest reading since 2005 and the first statistical reflection of the lockdown’s impact.

“It not just South African domestic factors which are built in here, but it is also global trends,” said Robert Besseling, director of risk assessment firm EXX Africa, citing Brexit, Eurozone weakness, and the United States-China trade dispute.

“The 2nd quarter…will be even worse potentially than the 1st,” he predicted.

“That’s just simply based on the lockdown, which was one of the harshest in the world,” he told Agence France-Presse. – Rappler.com