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South Africa’s economy is smaller than it was before the coronavirus pandemic struck, after the worst flooding in almost three decades and severe power outages caused it to shrink in the second quarter.
Gross domestic product contracted 0.7% in the three months to June, compared with downwardly revised growth of 1.7% in the previous quarter, Statistics South Africa said on Tuesday.
That’s the first decline since the third quarter of last year when deadly riots and a cyberattack at the state-owned port and freight rail operator weighed on the economy.
The deterioration in economic performance this quarter was led by lower economic activity in the manufacturing, agricultural and mining and quarrying industries.
The manufacturing industry declined by 5.9%, with eight of the ten manufacturing divisions reporting negative growth rates.
The agricultural sector registered a 7.7% decrease, led by a decrease in economic activity for animal products.
The mining and quarrying industry saw a 3.5% slump, on decreased production of gold, coal, manganese ore and diamonds.
Loadshedding – which was imposed on more than half of the days in the second quarter, according to Bloomberg calculations – also contributed to the drop.
South Africa’s economy remains stuck in its longest downward phase since World War II and hasn’t grown by more than 3% annually since 2012.
Slow policy reforms, weak business sentiment and high levels of crime continue to weigh on fixed investment spending, with private companies wary of committing large sums of money to domestic projects. Gross fixed capital formation rose 0.5% from the previous quarter.
For more on the GDP data visit www.moneyweb.co.za
