South Africa’s Economy Shrank By Most In 100 Years In 2020
Despite the growth in South Africa’s GDP in the three months ending in December, the economy of the nation recorded its biggest annual contraction last year due to the pandemic.
The whole world came to a standstill due to the pandemic, and this affected almost every country in the world. While some managed to survive the pandemic with a few losses, some countries faced the biggest hit in their economy. One such country is South Africa. Led by extension in the manufacturing, construction, and trade, South Africa’s GDP grew quarter and quarter in the three months ending in December, but the economy recorded its biggest annual contraction in more than seven decades in the year 2020.
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South Africa’s economy which was in recession before the covid-19 pandemic, worsened last year after the government imposed a strict lockdown to curb the spread of Covid-19. According to the reports released by Statistics South Africa on Tuesday in the capital, Pretoria, gross domestic product shrank 7%, compared with a 0.2% expansion in 2019. That’s the biggest decline in South Africa’s economy since the year 1920. Although this drop was smaller than what was forecast by the National Treasury in its annual budget last month.
According to Mpho Molopyane, an economist at FirstRand Group Ltd.’s Rand Merchant Bank, the economy of South Africa may only return to where it was at the end of 2019, by the year 2024. It will take approximately 3 to 4 years due to ongoing constraints such as electricity shortages, a slow reform agenda and repeated waves of Covid-19 infections. She also added that diminishing government spends combined with a weak recovery in employment will also affect the growth.
While commenting on the economy, African economist, Boingotlo Gasealahwe said, “We expect the loss in momentum in the recovery to extend to the first half of the year due to ongoing virus risks amid a slow vaccine rollout. However, the better-than-expected GDP outcome, together with rising food, oil and electricity prices will likely strengthen its resolve.”
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