South Africa’s economy shrinks for the first time in 11 years due to COVID-19

FOR THE first time in eleven years, South Africa’s economy has contracted due to the disruption caused by coronavirus lockdowns. This significantly impacted trade and output in 2020, causing the GDP to shrink by seven percent according to Statistics South Africa. The shrink is the economy’s first annual contraction since 2009 when GDP reportedly fell by 1.5 percent. The decline is attributed to reduced activity across industry, commerce, restaurants and hotels. Hospitality and tourism sectors within the country have been the worst impacted by the virus, due to night-time curfews and bans on alcohol sales, implemented as part of the effort to contain the virus. At the end of March, South Africa enforced one of the strictest lockdowns in the world – thereby effectively hampering the spread of the virus, although worsening the country’s economic outlook. Despite the current economic situation, things are expected to improve throughout 2021, with a forecasted potential growth of up to three percent.