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GDP slump marks 'time to rebuild economy, unleash SA's potential' says Ramaphosa

The country has slipped deeper into a recession, with Stats SA announcing the economy shrank by 16.4% from the first quarter to the second quarter of 2020.

FILE: President Cyril Ramaphosa announces changes to the National Executive at a media briefing held at the Union Buildings, Tshwane on the 22 November 2018.  Picture: GCIS

JOHANNESBURG - As South Africa sees its economy in decline due to the coronavirus, President Cyril Ramaphosa said now was the time to build a new economy and unleash the country's true potential.

The country has slipped deeper into a recession, with Stats SA announcing the economy shrank by 16.4% from the first quarter to the second quarter of 2020.

The largest negative contributors were manufacturing, trade and transport, which were severely affected by the lockdown regulations. However, agriculture and communication improved.

All non-essential services and businesses closed, resulting in most industries recording a decline in growth for the second quarter.

The president said having acted swiftly and decisively to save lives and bring the pandemic under control, government's focus is now on economic recovery.

In a statement, Ramaphosa said while the contraction of the economy represented an anomaly due to the lockdown imposed at the end of March, these figures reinforced the importance of enabling a strong rebound in subsequent quarters.

The President has submitted three important processes underway to support economic recovery.

He wants social partners to present a social compact on economic recovery to him, he said thereafter, government would finalise its recovery strategy and then only would the president implement his employment stimulus within the next month.

* CYRIL RAMAPHOSA: We need national effort to rebuild SA economy

But Alexander Forbes chief economist Isaah Mhlanga said repairing the economy was likely to take years.

“We are not expecting any improvements because we need the economic reforms that are going to crowd in the private sector to come in and reinvest in the economy. My estimation is that we are only going to return to 2019 levels of the economy in 2023 or 2024.”

The president said he would be making further announcements on his plans in due course.

Listen to economist Dr Miriam Altman on GDP Q2 collapse

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