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Wednesday, June 29, 2022

South Africa’s GDP Plunges by 51% Annualized in Q2

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South Africa’s gross domestic product (GDP) shrank an annualized 51 percent in the period through June from the previous quarter, compared with a revised 1.8 percent contraction in the first three months, Statistics South Africa said Tuesday in the capital, Pretoria.

Restrictions to curb the spread of the coronavirus put the economy into its longest recession in 28 years, with GDP contracting more than expected in the second quarter.

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.

A strict nationwide lockdown that started on March 27 deepened the slump, while a gradual re-opening of the economy started on May 1, many companies closed down permanently or fired workers during the shutdown.

Output shrank more than the central bank’s estimate of a 40.1% annualized contraction, increasing the chances of a sixth interest-rate cut this year.

Key Data Points

  • Expenditure on GDP fell an annualized 52.3% in the quarter.
  • Household spending dropped by 49.8%.
  • Gross fixed capital formation decreased by 59.9%.
  • Agriculture expanded, with 15.1% growth as most farming operations continued during the lockdown as essential services.
  • Construction showed the biggest decline, at 76.6%, followed by manufacturing at 74.9% and mining at 73.1%. Most activity in these sectors was halted for the initial part of the lockdown.
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