South Africa suffered its worst-ever economic contraction in April. This was according to the South African Reserve Bank (SARB) which released data on economic activity.
According to an Investec economist, Annabel Bishop, the SARB data showed that economic activity (measured by the co-incident indicator) declined by 26.8% in April, compared to the same month last year. On a month-to-month basis, this indicator had fallen by 22%.
In April South Africa was under level 5 lockdown, with only essential businesses and services allowed to operate.
According to Bishop, the data has never before shown a contraction of more than 20%. During the Great Recession the biggest month-on-month drop was 12.8% and on a year-on-year basis it was 0.7%. The previous worst month before this was in March 1977 when there was a year-on-year contraction of 19.2%.
Investec expects GDP to decline by nearly 50% in the second quarter and an overall decline for 2020 of 10.1%. The National Treasury is slightly less pessimistic and expects the GDP contraction to be 7.2%.
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