Lockdown economy: Business activity plummets with only agriculture coping
“The punch in the gut was severe,” Stats SA said on Tuesday when it released the Covid-19 “pandemic quarter” GDP data.
SA’s economy suffered a significant contraction during April, May and June, when the country operated under stringent lockdown restrictions to try to curb the spread of the coronavirus.
GDP decreased by 51% in the second quarter of 2020 as nearly all industries experienced a massive drop in output.
Stats SA said: “Construction was the biggest loser. Already in bad shape before the pandemic, the industry experienced its eighth consecutive quarter of economic decline.”
The manufacturing industry contracted by 74.9% in the second quarter. All 10 manufacturing divisions reported negative growth rates in the second quarter. The divisions that made the largest contributions to the decrease were basic iron and steel, non-ferrous metal products, metal products and machinery, food and beverages, petroleum, chemical products, rubber and plastic products.
Activity in the trade, catering and accommodation industry decreased by 67.6%. Decreased economic activity was also reported in wholesale trade, retail trade and motor trade. The industry was hit hard as only selected essential goods were allowed to be sold during the early stages of the lockdown. Catering and accommodation establishments were severely restricted during lockdown.
The transport, storage and communication industry reported a 67.9% decrease. Decreases were reported in land transport, air transport and transport support services.
The mining and quarrying industry decreased by 73.1% and contributed -6.0 percentage points to GDP growth. Owing to global lockdown restrictions, demand for mineral products fell, contributing to decreased production in platinum group metals, gold, iron ore, chromium ore and coal.
The finance, real estate and business services industry decreased by 28.9% and contributed -5.4 percentage points to GDP growth. Decreases were reported for financial intermediation, insurance and pension funding, auxiliary activities and other business services.
The agriculture, forestry and fishing industry was the only positive contributor to GDP growth, with an increase of 15.1% and a contribution of 0.3 of a percentage point to GDP growth. The increase was mainly due to increased production of field crops and horticultural and animal products.
Gross fixed capital formation decreased by 59.9%, said Stats SA.
“The main contributors to the decrease were construction works, machinery and other equipment, residential buildings, transport equipment and non-residential buildings. Weak imports of machinery and other equipment as well as transport equipment contributed to the decrease in gross fixed capital formation.”
Net exports also contributed negatively to growth in expenditure on GDP in the second quarter. Exports of goods and services were down 72.9%, largely influenced by decreased trade in vehicles and other transport equipment, precious metals and stones, base metals, machinery and equipment and services.
Imports of goods and services decreased by 54.2%, driven largely by decreases in imports of vehicles and other transport equipment, machinery and electrical equipment, mineral products, base metals and services.