South Africa’s Gross Domestic Product (GDP) plunged by 51 per cent in the second quarter of 2020 reflecting the immense damage done by the COVID-19 lockdown on Africa’s second-largest economy.
The contraction further pushed South Africa deeper into recession, marking the fourth consecutive quarter that the country’s GDP will be in the negative territory.
The GDP slid by 2 per cent for the first quarter of 2020 following a drop of 1.4 per cent in the last quarter of 2019 and 0.6 per cent decline in Q3 2019.
In a breakdown, manufacturing contracted by 74.9 per cent in the second quarter. All 10 manufacturing divisions reported negative growth rates in the second quarter.
The divisions that made the largest contributions to the decrease were basic iron and steel, non-ferrous metal products, metal products and machinery; food and beverages; and petroleum, chemical products, rubber and plastic products, Stats SA said.
The trade, catering and accommodation industry decreased by 67.6 per cent. Decreased economic activity was reported in wholesale trade, retail trade, motor trade, catering and accommodation.
The industry was hit hard as only selected essential goods were allowed to be sold during the early stages of the lockdown. In addition, catering and accommodation establishments were severely restricted during the lockdown.
The transport, storage and communication industry decreased by 67.9 per cent. Decreases were reported for land transport, air transport and transport support services.
Mining and quarrying decreased by 73.1 per cent, contributing a 6.0 per cent slide to GDP growth. Owing to global lockdown restrictions, demand for mineral products fell, contributing to decreased production in platinum group metals (PGMs), gold, iron ore, chromium ore and coal.
Finance, real estate and business services decreased by 28.9 per cent and contributed a contraction of 5.4 to the figure. Decreases were reported for financial intermediation, insurance and pension funding, auxiliary activities and other business services.
The agriculture, forestry, and fishing industry was the only positive contributor to the country’s GDP growth, with an increase of 15.1 per cent and a contribution of 0.3 per cent to GDP growth. The increase was mainly due to increased production of field crops and horticultural and animal products.
The unadjusted real GDP at market prices for the first six months of 2020 decreased by 8.7 per cent compared with the first six months of 2019.
Already in a recession, South Africa’s economy was further hit in the second quarter of the year by the almost complete shutdown of businesses and production under high-level lockdowns, which were imposed to curb the spread of the coronavirus.
