The gross domestic product of South Africa declined by 0.7 percent in the second quarter of 2022, falling below the downwardly reviewed growth projection of 1.7 percent in the previous quarter. However, the GDP grew 0.2% year-on-year unadjusted in the second quarter, according to Statistics South Africa.
This contraction of Africa’s second-largest economy has reached a pre-pandemic level as severe flooding at the key export hub of the country and acute power outages weighed on economic activities in the country.
Citing Statistics South Africa’s report, Bloomberg stated that this decline is the first since the third quarter of last year when deadly riots and a cyberattack at the state-owned port and freight rail operator mounted pressure on the economy.
South Africa’s quarter two economic performance was weakened majorly by slow economic activities in the manufacturing, agricultural, mining and quarrying industries.
Specifically, the agricultural sector which had the largest decline, shrunk by 7.7% as economic activity for animal products decreased significantly. Manufacturing, the second most affected sector declined by 5.9%, with eight of the ten manufacturing divisions posing negative growth rates. The mining and quarrying industry recorded a 3.5% slump, due to decreased production of gold, coal, manganese ore, and diamonds.
South Africa’s second-quarter economic outcome is consistent with the opinion of an IMF team that visited the country previously.
According to the views expressed by IMF Staff that visited South Africa in June 2022, the country is enjoying a windfall gain from favorable commodity prices, which have raised exports and government revenue, but is still susceptible to a series of shocks that have darkened the country’s economic outlook. The IMF team highlighted the flooding in Durban, uncertainty about the war in Ukraine, tightening of global financial conditions, and China’s slowdown to pose an adverse impact on growth and price stability.
The Fund’s team recommended policy actions that will cushion the shocks caused by these factors whilst paying attention to the longstanding structural economic obstacles to growth in the country.
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