SA extends its longest economic slump since 1945

‘The effect on household income will likely impact overall demand in the economy’ – Sarb.
Image: Bloomberg

The South African economy extended its longest downward cycle since 1945 as restrictions to curb the spread of the coronavirus weighed on output and are set to hurt household finances even more.

The economy entered the 80th month of a weakening cycle in July, according to data in the Reserve Bank’s Quarterly Bulletin released Thursday. That’s after a nationwide lockdown that started on March 27 shuttered most activity and weighed on output. Business and consumer confidence languish at multi-year lows, with many firms having closed permanently and thousands of jobs lost.

Household finances that deteriorated in the first quarter are likely to get much worse. Net wealth fell to 330% of nominal disposable income, compared with 360% in the three months through December, according to the report. That’s as a sharp drop in share prices due to virus-related panic trading weighed on the value of assets held by households, the central bank said. South Africa’s main stock index declined by 22% during the period, the largest decline since the third quarter of 1998.

Portfolio outflows surged to R97.56 billion ($5.85 billion), the highest level on record. That’s due to the net sales of debt and equity securities by non-residents, as well as the redemption of a $1.6 billion international government bond, the central bank said.

No pay

About 3 million fewer people were employed in April, according to a National Income Dynamics Study-Coronavirus Rapid Mobile Survey published Wednesday. A third of all income earners in February weren’t paid in April because they lost their jobs or were furloughed, the study showed.

Growth in nominal remuneration per worker slowed to 4.1% in 2019 compared with 4.9% a year earlier, central bank data showed. That the lowest since 1970. Public sector nominal wage growth per worker more than halved to 6.6% in 2019 from a recent peak of 13.7% in 2010.

“Household finances ought to be affected by both an increase in unemployment and a loss of income as the salaries of some employees, in particular in the non-essential industries, were reduced during the lockdown with knock-on effects such as debt repayments,” the Reserve Bank said in an emailed response to questions. “The effect on household income will likely impact overall demand in the economy.”

© 2020 Bloomberg

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australians are sitting pretty…south african screwwed around during the comondities boom with white monopoly capital,corruption and funding SOE eg SAA overpaid pilots,eskom… AND funding apartheid
officials for life instead eg SASOL,eskom,telkom,NP politicians.

Australians.. lmao. No.. I’d not call their housing market a success nor their gov biting the hand that fed them and prevented recession for a record years, nor their infamous exports that ironically directly impacted them this year via fires.

yes, the hand that gave the world the corona virus..

I put my money on AUZ anytime rather than this Zimbo lot running ZA..

Who has been either No1 or No2 during the wasted 80 months???

Yaa right. See him for what he is.


As an economic force South Africa is ‘finished’. It was the one thing that kept the ANC house of card intact but they not could even figure that out. This county has twice been ruined by racial obsession and this time with the help of ridiculous ideology and an incompetent, corrupt ANC. Mandela laid the difficult groundwork for success and Mbeki, Zuma and now Ramaphosa have systematically (and deliberately?) crushed his nation-building, national unity ideal. The only question is how the decline to Zimbabwe 2.0 will evolve. It is already a massive tragedy but what is likely to follow is almost too ghastly to contemplate.

I have honestly lost all hope for any economic expansion in SA. The JSE is overheated, interest rates are too low and I don’t see ANY opportunity for investment now or in the future.

Covid will be used by the ANC as an excuse for economic failure and to them it is a blessing in disguise.

The irony is that the majority of the population are simply not concerned for lack of understanding or are simply in denial.

We will soon be riding the tiger with no ability to steer it. Scary.

Yes sadly RSA to be compared to a period of devastation at the end of WW2! Q3 has only just started and the global economic fall out from the lock down is starting to bite – markets and the RAND in my opinion are about to drop off a cliff – a note to ZAR bulls, not much time left in my opinion to cover.

A year from today they will need to go back to WW1 for comparisons, however, i doubt many will care at that stage, as you will be too busy protecting your lives, property and what is left of your investments.

The problem we have is that it is a fact that it is far easier to LOOT from the government fiscus in times of fear and panic, than it is in times of relative stability and strength. Who is going to care what happened to R250 billion unaccounted for, when we will need R3 – R5 trillion to keep us from plunging into the dark ages.

The ruling party will of course blame Covid-19 and not their devastating and totally unnecessary lock down. All that has happened in reality, is that we are just getting to our same economic destination on an accelerated time scale. Same result just 5 years earlier.

This covid fallacy will not even and is NOT registering as a blip on our average daily mortality rate average over the last 10 years. However, as a result of extreme poverty (induced by lock down), the next 10years are likely to see our daily mortality rate climb to 200%-300% what it is today.

The culture of entitlement and instant gratification is alive and well. All very well and good for the ruling 2,000. What about the other 60 million.

The ANC looters have brought South Africa to its knees. It is now clear that the velocity of this fall will increase. While the ANC created chaos reigns the looting will accelerate until they will be on each others throat for the last remnants to be looted.

We’re at a point of no return.scary least i can still ride my motorcycle.

End of comments.





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