South African economy contracts third quarter in a row

The recession continues…
Image: Moneyweb

The South African economy recorded its third consecutive quarter of economic decline, falling by 2.0% in the first quarter of 2020, Statistics SA reported on Tuesday.

This followed a contraction of -1.4% and -0.8% in the fourth and third quarters of 2019, expending the recession it found itself in the last quarter.

Though a fall was anticipated due to the Covid-19 induced lockdowns, it is the load shedding that contributed to the decline. The full impact of Covid-19 on SA’s economy is expected to only show up in GDP data for the second and third quarters of the year.

It reported that mining and manufacturing were the most significant contributors to the economy’s poor performance in the first quarter.

“Mining activity slowed by 21.5%, the biggest slump in six years. Iron ore, manganese and chromium were the biggest drags on mining growth, offsetting positive gains made by coal, diamonds and platinum group metals,” Stats SA said in its report.

Economic activity in the manufacturing industry decreased by 8.5%, its third consecutive quarter of negative growth.

“The contraction was mainly due to decreases in the production of petroleum products, metals and machinery, and transport equipment. Lower demand and maintenance stoppages contributed to the industry’s poor showing in the first quarter,” Stats SA said in its report.

Softer demand for electricity and water pulled the electricity, gas and water supply industry down by 5.6%.

Construction registered its seventh consecutive quarter of economic decline, slipping by 4.7%.

Stats SA explains that this is due to decreased activity relating to construction works as well as the construction of residential and non-residential buildings.

The economy is expected to contract 7.2% this year according to the Treasury.

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No Supprise here but the reason for the contraction read like a diagnoses from a doctor, only pointing to the symptoms not the root cause of the problem.

This should read something like:
Mining contracted because of the poor policy implemented by the governing party, this has hindered in positive foreign investment whilst pushing up the cost of doing business.

Demand for electricity declined due to price extortion and the inability of government to take action, the suffering and economic hemoraging will continue.

Construction well there is nothing getting built here, everything is in complete decay and the few brave businesses which operate do so staring at the barrel of a loaded gun.

SARS continues to tax citizens into extinction whilst the governing party repeat history again and again by proving that socialism & tribalism do not work as the only reason they force it because it draws on human emotion and that makes people vote.

GDP is expected to contract for 4 more quarters and we will be lucky if we end the year with -15% growth, good luck.

Corruption and looting is the biggest contributors

And it’ll keep contracting as long as the ANC are running the country

… into the ground

Duh Recession — This is a full blown DEPRESSION that will make the late 40 ties look like a cake walk !!!

The ANC is overseeing one of the ‘great’ economic destructions in history. Just to think they inherited a world-class, economic powerhouse in 1994. We this latest economic contraction force them to reflect on their policies. I doubt it.

We are only seeing the beginning of a terrible time.

I’m really “shocked” at all the good news!

Don’t worry the ANC is debating whether to bring on board the fingered VBS culprits to pick up the rand.

These are based on seasonally adjusted annualised quarter on quarter numbers, so for technical reasons (unlocking the lockdown) this recession should end in the third quarter of 2020. A dead cat bounce…..we might fall again in the fourth quarter and re-enter recession in the first quarter of next year 2021 due to the wealth, job and demand destruction.

I think we will be praying to the US as the consumer of last resort. China as the most open economy and most reliant on semi-durable and durable goods sales will feel the brunt of this recession. Surely to resuscitate demand China may have to write off more debt as it is more leveraged to world growth than debtors are.

Writing off debt may in this instance be worth more to China than the debt itself. As a bigger issue is the run on commodities, without such debt write-offs it could collapse SA into deep trouble.

…is this a copy & paste off the China daily times

“China as the most open economy…”

And I thought the economy was central to the CCP

This is not a technical recession but a real deep recession.

If this was not so painful for all it could become a classic comedy. How not to run a country or more nostalgic the rise and fall of the anc.

… the fourth (4th) time will be coming soon too …

hopefully Emirates will be operational by then…

I heard other countries need skills (not based on the colour of your skin)

End of comments.





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