According to Statistics South Africa, the country’s economy decreased by 2.0% in the first quarter of 2020. Extending the technical recession the country found itself in in the last quarter of 2019.
Stats SA’s latest quarterly GDP figures come only a week after SA’s finance minister Tito Mboweni tabled a supplementary budget in part of the country’s response against the COVID-19 pandemic. South Africa is the worst affected country in the continent.
Treasury now expects the country’s GDP to contract by a record 7.2% by the end of the year, while tax revenues are expected to fall over R300 billion shorter then what was estimated in February’s budget.
Fin24 reports that the global economy is likewise looking dour. The UK is reporting a 2.2% contraction between January and March this year – the largest contraction to hit the UK’s economy in 40 years.
According to the International Monetary Fund, the world economy is expected to contract sharply by 5.2% this year, due to the huge lockdown to curtail the spread of the COVID-19 pandemic.
“The electricity, gas and water industry contracted by 5.6% in the first quarter, largely due to decreases in electricity distributed and water consumption. The construction industry decreased by 4.7%. Decreases were reported for residential buildings, non-residential buildings and construction works,” says Stats SA in its report on the GDP figures released on Tuesday.
South Africa’s economy is also plagued by load shedding, which played a significant role in the economy’s contraction in the fourth quarter of 2019. COVID-19 only added more straw to South Africa’s back, lengthening the contraction into Q1 2020.
South Africa’s slow growth
The recession in 2019, a 1.4% fall in GDP following a 0.8% contraction in Q3 2019, plunged South Africa.
For the whole of 2019, the South African economy grew by only 0.2% (in real terms). In 2018, it saw a growth of 0.8%.