South Africa’s economy contracted at the sharpest rate in a century in 2020 after restrictions imposed to curb the spread of the coronavirus pandemic devastated GDP and disrupted trade, where this is considered as the largest decline in the economy since 1920.
But that decline was less than what the National Treasury had expected when it announced its annual budget last month, and the economy may return to the level it was at the end of 2019 by 2024 depending on the restrictions that will be imposed in the long term, such as electricity rationing, the slow restructuring plan, and the repeated waves of increasing infections with the Covid-19 virus, where the lower government spending and weaker employment improvement will affect the growth of the economy.
The growth of the economy during the fourth quarter exceeded the expectations of economic analysts, and the rapid recovery and return to the levels of growth that were before the Corona epidemic will contribute to strengthening the government’s efforts to bridge the debt and fiscal deficit that rose during the past year.
According to the reports of the last quarter ending in December, the gross domestic product increased by 6.3% compared to the previous quarter on an annual basis, to follow an adjusted growth rate of 67.3% in the last third quarter ending in September, and the average of analysts’ estimates was that the GDP would rise by 5.6%, but contracted by 4.1% year-on-year during the fourth quarter.
South Africa’s economy is stuck in its longest downturn since World War II with the country’s political paralysis and plunging business sentiment affecting fixed investment spending, as well as private sector companies worrying about allocating huge sums of money to invest in local projects.