The Reserve Bank forecast the economy will shrink by 8.2% in 2020, but some forecasts foresee a double-digit contraction due to a fallout from coronavirus pandemic.
The bank revised downwards its outlook as the impact of the lockdown imposed in March becomes clearer.
“The bank now forecasts a GDP contraction of 8.2 in 2020, compared to the 7.3% contraction forecast in July,” governor Lesetja Kganyago said
In a report, the Paris-based Organisation for Economic Co-operation and Development (OECD) stated that South Africa’s GDP was likely to shrink by 11.5%.
OECD warned that South Africa will struggle to emerge from the slump owing partly to power cuts by state energy firm Eskom.
But the central bank is upbeat, expecting the economy to grow by 3.9% in 2021 and by 2.6% in 2022.
The government had shut down the country in a bid to rein in the spread of coronavirus, pushing the already-ailing economy into a deeper recession.
Since June, the government has gradually allowed businesses to resume operations in a bid to shore up the economy.
It will open up borders for international travel starting next month. The central bank chief warned that recovery to pre-pandemic levels would take “several years”.
Even before the economic fallout from the coronavirus lockdown, South Africa’s economy was in recession and reeling from high unemployment
In other news – Somizi to address Social Media tonight at 7pm
The “Idols SA“ judge took to social media to let his fans and followers know that he will be doing an Instagram Live session on Thursday, September 17 at 7pm to address any questions people may have for him. Learn more