SA economy expected to have biggest contraction in 90 years: Tito Mboweni

The economy is headed to its biggest contraction in 90 years as a result of the coronavirus outbreak.

This is according to finance minister Tito Mboweni, who was tabling his emergency supplementary budget on Wednesday during a virtual sitting of parliament.

Mboweni said the National Treasury now expected the local economy to shrink by 7.2% — the largest contraction in almost a hundred years.

He said this was on the back of a contracting global economy, which in February he projected would expand by 3.3% but was now estimated to contract by 5.2% due to the impact of the Covid-19 pandemic.

“This will bring about the broadest collapse in per capita incomes since 1870. Throughout the world, tens of millions of workers have lost their jobs,” he said.

“South African unemployment increased by one percentage point, reaching 30.1% in the first three months of this year.

“The South African economy is now expected to contract by 7.2% in 2020. This is the largest contraction in nearly 90 years.

“Inflation will likely register 3% in 2020, in line with the outcome of this morning.

“Commodity price increases and a weaker oil price have softened the blow but as a small, open economy reliant on exports, we have been hit hard by both the collapse in global demand and the restrictions to economic activity.”