The South African economy collapsed during a strict lockdown

PRETORIA (Reuters) – South Africa’s economic output slumped in the second quarter, posting its biggest contraction to date as a strict lockdown to slow the spread of the coronavirus shut down most of the activity, data showed on Tuesday.

Production fell 51.0% in annualized quarter-on-quarter terms, the main reading presented by Statistics South Africa to show how the economy would perform for a full year if the quarter-on-quarter growth rate occurred four times in a row.

In unadjusted terms, which is the number of countries that present their data, the contraction was 16.4%, and in interannual terms it was 17.1%, which shows the magnitude of the economic impact of the COVID-pandemic. 19 in the most industrialized nation in Africa. .

Analysts polled by Reuters had forecast an annualized contraction of 47.3% due to the lockdown restrictions, among the toughest in the world, as South Africa has suffered the seventh-highest number of coronavirus cases worldwide.

“This is the first time in history that the South African economy has contracted for four consecutive quarters,” statistician General Risenga Maluleke told a news conference.

The rand fell more than 1% against the dollar according to data to trade at 16.9375 to the dollar.

Joe de Beer, another senior official at the statistics agency, said that after adjusting for inflation, the economy was roughly the same size in the April-June quarter of this year as it was in the first quarter of 2007.

Most sectors suffered a sharp decline except agriculture, which grew 15.1% in the second quarter from January to March, helped by fruit and nut exports and better-than-average winter rains.

Mining decreased 73.1%, manufacturing 74.9% and construction 76.6%. The gross domestic product (GDP) of the entire economy contracted by 17.1% compared to the same period in 2019.

In reaction to the data, President Cyril Ramaphosa said his government was finalizing an economic recovery strategy to allow for a quick rebound. The strategy will include accelerated reforms, employment programs and large-scale investments in infrastructure, he said.

HARD TIMES

Jeff Schultz, an economist at BNP Paribas, said the global impact of the pandemic coupled with the recent return of power outages would hamper any economic recovery.

The government expects a GDP drop of at least 7% in 2020, a worrisome prediction in a country where unemployment hovered around 30% before the COVID-19 pandemic.

Pamela Mutandwa, 37, who runs a roadside vegetable stand in Pretoria, said times were tough. “It was really difficult during the confinement. There were no people buying and I fought. When I opened in 2009 there were more customers. “

Tlouama Abrama, 31, a gasoline assistant, said he was disappointed by the government’s economic policies. “They should do more to revive the factories here so that people can get jobs. Their policies are not working, ”he said.