JOHANNESBURG – The South African economy has entered into a seriously deeper recession following a fourth consecutive decline in the gross domestic product (GDP) in the second quarter of 2020.
President Cyril Ramaphosa said this decrease in GDP reflected the severe impact of the global coronavirus pandemic on the economy and should spur all South Africans to do all they can to help rebuild the economy.
Ramaphosa said countries across the world were facing significant economic disruption as a result of the pandemic, leading to the worst global downturn in decades. South Africa has not been spared.
Statistics South Africa (StatsSA) on Tuesday said the GDP fell by 51 percent in the second quarter owing to the impact of the Covid-19 lockdown restrictions since the end of March.
The economy was already in recession following two consecutive quarters of negative growth after declining by 2 percent in March.
StatsSA said all economic sectors recorded negative growths in the period, except for the agricultural sector with an increase of 15.1 percent due to increased production of field crops and horticultural and animal products.
The manufacturing industry contracted by 74.9 percent in the second quarter while trade, catering and accommodation industry fell by 67.6 percent.
The transport, storage and communication industry decreased by 67.9 percent and the mining and quarrying industry decreased by 73.1 percent.
The finance, real estate and business services industry was 28.9 percent down in the second quarter.
StatsSA said household spending on most products declined by 49.8 percent in line with the closure of hotels, restaurants, transport services, recreational facilities and many stores.
The ban on alcohol and cigarette sales also had an impact on household expenditure.
Expenditure on utilities, communication and education contributed positively to growth in household final consumption expenditure as many households started working from home.
This consequently saw households increasing their usage of utilities and communication services.
BUSINESS REPORT