SA sinks deeper into recession, the worst yet to come

 

South Africa’s economy plunged 2% in the first quarter of the year following a 1.4% contraction in the last quarter of 2019 – sending the country deep into recession

The first-quarter gross domestic product (GDP) was the worst print since the first quarter of 2019, amid the initial effects of the global pandemic on domestic activity even before the implementation of the nationwide lockdown.

Mining and mining & quarrying registered the steepest declines in the quarter under review, plunging 21.5%, while manufacturing contracted 8.5%.

Statistics South Africa said seven of the ten manufacturing divisions reported negative growth rates in the first quarter.

“The divisions that made the largest contributions to the decrease were petroleum, chemical products, rubber and plastic products; basic iron and steel, non-ferrous metal products, metal products and machinery; and motor vehicles, parts and accessories and other transport equipment,” said the stats agency in a statement.

The agriculture, forestry and fishing industry saw growth of 27.8% due to a surge in the production of field crops, horticultural products and animal products., horticultural products and animal products in the quarter.

The second quarter GDP data is expected to show a steeper contraction due to the impact of COVID-19 in the quarter which saw business activity scaled back significantly.

Geoff Nölting, FNB Economist, said: “Looking ahead, we expect 2Q20 (second quarter) GDP to register the largest contraction on record. This can be ascribed to lockdown measures adversely affecting economic activity. More stringent regulatory requirements in the leisure and hospitality industry, and temporarily in the extractive sectors of the economy, will almost certainly weigh on the growth outcome.”

 

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