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SA heads towards 'tougher times' as GDP contracts by 2%

This was the third consecutive decline with the economy remaining in recession.

Picture: Pexels

JOHANNESBURG - Economists and civil society agree that South Africa is headed for even tougher times after Statistics South Africa announced gross domestic product (GDP) contracted by 2% in the first quarter of the year.

This was the third consecutive decline with the economy remaining in recession.

While the post-lockdown data will only be revealed later on this year, Stats SA said the effects of COVID-19 could already be seen in the first quarter as some international economies with links to South Africa were affected by the pandemic at the beginning of the year.

First National Bank said it expected the second-quarter GDP data to register the “largest” contraction on record.

Should this come to pass, it would be the fourth consecutive decline with the last two-quarters of 2019 recording 1.4% and 0.8% respectively.

The bank said the restrictions in the leisure and hospitality industry and temporarily in the extractive sectors of the economy would weigh on the growth outcome.

The South African economy is projected to shrink by 7% this year.

Meanwhile, the Congress of South African Trade Unions said it was not shocked by the contraction, saying the slump was not due to COVID-19 only, but in part reflects the failure of the medium-term strategic framework of 2014 to 2019.

All secondary sectors of the economy recorded negative growth rates over the first quarter led by manufacturing with an 8.5% decline.

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