Recession enters fourth quarter with 51% GDP drop

South Africa’s restrictions to curb the spread of the coronavirus put the economy into its longest recession in 28 years, with gross domestic product contracting more than expected in the second quarter.

GDP shrank an annualised 51% in the three months through June from the previous quarter, compared with a revised 1.8% contraction in the first three months, Statistics South Africa said Tuesday in the capital, Pretoria. That’s the steepest decline since at least 1990 and extended the recession into a fourth quarter, the longest period of consecutive quarterly contractions since 1992. The median estimate of 17 economists in a Bloomberg survey was for a 47.2% drop in output.

The economy contracted 17.1% from the same period a year earlier, the most since at least 1994.

A strict nationwide lockdown that started on March 27 deepened the slump in an economy that’s stuck in its longest downward cycle since at least World War II. Enforced by the police and military, people were only allowed to leave their homes to buy food, collect welfare grants and seek medical care unless they provided essential services. While a gradual re-opening of the economy started on May 1, many companies closed down permanently or fired workers during the shutdown.

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Source: moneyweb.co.za