News24
08 Sep 2020, 17:40 GMT+10
Statistics South Africa announced on Tuesday morning that the South Africa's economy contracted by 51% in the second quarter of 2020.
In the wake of the announcement the rand came under pressure to trade over 1% weaker against the dollar. The local currency opened the day's trade at around R16.7 to the greenback and was changing hands at R16.94/$ in the early afternoon.
According to Stats SA, the record plunge was due to the "impact of the Covid-19 lockdown restrictions since the end of March 2020".
This extends South Africa's recession for yet another quarter, as the economy continues to battle the Covid-19 pandemic and growing unemployment. The second quarter of the year includes the months April, May and June, when the country's strictest lockdown measures were in place.
South Africa entered its second recession of President Cyril Ramaphosa's administration in the second half of 2019. The data released by Stats SA on Tuesday means that GDP has now fallen for four successive quarters.
READ | SA economy could shrink over 45% in Q2, load shedding won't improve prospects
Investment strategist at Old Mutual Multi-Managers, Izak Odendaal, said after the data was released on Tuesday that while the quarterly GDP figures were roundly bleak, the year on year figure was not as quite as stark.
"It's a historically bad contraction, as Stats SA pointed out. It is somewhat worse than other countries have seen, but we have seen contractions of 40% plus in other countries. Bear in mind that this is annualised," said Odendaal.
Odendaal said the fact that agriculture was the only positive contributor in the quarterly figures was an indication that once the economy starts to recover, the upswing will likely be driven by the country's primary and secondary sectors.
"This is encouraging, and the crop estimates for this year are expected to be good. This recovery looks like it will be driven by primary and secondary sectors, while pressure on consumers continues," Odendaal said.
Following the release of the first quarter GDP figures in July, which showed South Africa's economy contracted 2%, Treasury said it expected SA's GDP to contract by a record 7.2% for the year.
Ahead of the release of the latest GDP data on Tuesday, meanwhile, the economic consensus was for a contraction of over 40%, with only a few economists warning of a plunge of up to 50%.
Get a daily dose of Irish Sun news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Irish Sun.
More InformationANKARA, Turkey: A Turkish far-right politician went on trial Wednesday, facing charges of inciting public hatred—an episode critics...
LONDON, U.K.: In a landmark moment for Britain, lawmakers in the House of Commons have voted in favour of legalising assisted dying,...
Western support for Israel's right to strike Iran backs up a pattern of pre-emptive violence that critics say is further eroding international...
OTTAWA, Canada: Canada may boost its counter-tariffs on steel and aluminum imported from the U.S. if a comprehensive trade agreement...
BANGKOK, Thailand: Thailand's government is facing its biggest crisis in nearly a year, as Prime Minister Paetongtarn Shinawatra's...
WASHINGTON, DC - U.S. President Donald Trump how bowed to pro-Israel elements in his administration and Congress, announcing that the...
DUBLIN, Ireland: Dublin Airport has received a warning for going over its allowed number of passengers. As part of a rule set by...
ANKARA, Turkey: A Turkish far-right politician went on trial Wednesday, facing charges of inciting public hatred—an episode critics...
ZURICH, Switzerland: A wave of central banks across Europe surprised markets last week by lowering interest rates, responding to easing...
ZURICH, Switzerland: The Swiss National Bank (SNB) lowered its key interest rate to zero percent on June 19 to respond to falling inflation,...
THE HAGUE, Netherlands: The city that prides itself on being a beacon of peace and justice—home to institutions like the International...
DUBLIN, Ireland: Fine Gael Senator Mark Duffy says new laws to regulate vaping products will help make them less attractive to young...