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South Africa's economy contracts by record 51% in Q2
South Africa's GDP decreased by a record 51.0 per cent in the second quarter, due to the impact of COVID-19 lock-down restrictions. The largest negative contributors to growth in GDP were the manufacturing, trade and transport industries which saw muted economic activity amid lockdown. Old Mutual Chief Economist, Johann Els joins CNBC Africa for more.
Tue, 08 Sep 2020 11:09:07 GMT
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AI Generated Summary
- South Africa's GDP contracted by 51 percent in the second quarter, attributed to COVID-19 lockdown restrictions impacting various sectors.
- Agricultural sector witnessed a 15 percent growth, offering a ray of hope amidst economic downturn.
- Economist Johan Els emphasized the need for sustained growth across sectors, policy reforms, and swift implementation to drive recovery.
South Africa's Gross Domestic Product (GDP) plunged by a staggering 51 percent in the second quarter of this year, marking a record decline. The significant drop was primarily driven by the COVID-19 lockdown restrictions, which severely impacted various sectors of the economy. According to Old Mutual Chief Economist Johan Els, the manufacturing, trade, and transport industries were the key negative contributors to the GDP decline, as these sectors experienced subdued economic activities amidst the lockdown. However, amidst the gloomy economic scenario, there was a glimmer of hope in the agricultural sector, which witnessed a 15 percent growth during the same period. Johan Els highlighted the challenges faced by the economy and discussed the prospects of recovery in an insightful interview with CNBC Africa. Els emphasized the difficulties in accurately forecasting such unprecedented economic outcomes, acknowledging that the situation was even worse than anticipated. He expressed cautious optimism about a potential rebound in the coming months as lockdown measures are gradually lifted, allowing economic activities to resume. Although Els acknowledged the positive signs of recovery, he also underscored the looming threat of further job losses and emphasized the need for sustained growth across various sectors to navigate through the economic downturn. He pointed out that the economy is likely to witness a significant contraction of around 8 percent this year, indicating a difficult road to recovery. While sectors like agriculture, mining, and manufacturing are expected to drive the rebound in the third quarter, Els cautioned that substantial policy changes are essential to stimulate long-term growth. Els urged for immediate implementation of proposed policy reforms to address structural challenges hindering economic growth. He highlighted the importance of tackling issues like Eskom restructuring and load shedding to enhance economic stability. Despite the persistent economic decline prior to the COVID-19 crisis, Els expressed confidence in the government's policy initiatives, emphasizing the critical need for swift action to translate plans into tangible outcomes. He called for a decisive shift from rhetoric to implementation, stressing the urgency of executing economic reforms to foster sustainable growth. Els noted that while the economic outlook remains uncertain, there are signs of momentum building towards meaningful reforms. As South Africa grapples with the severe economic repercussions of the pandemic, the focus now turns to the government's ability to catalyze recovery and drive the economy towards a path of sustainable growth and prosperity.
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