Africa Outlook

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.

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