Engineering News reports that a new World Bank report warns that the South African economy will this year experience its deepest economic contraction in a century, with the country’s gross domestic product (GDP) forecast to slump by 7.1% on the back of “stringent but necessary” Covid-19 containment measures.  

The bank’s forecast is more or less in line with the SA Reserve Bank’s (SARB's) most recent expectation of a 7% contraction for 2020.  Finance Minister Tito Mboweni is anticipated to provide an update to the National Treasury’s forecast when he releases a special adjustment budget on 24 June.  Other commentators, including Business for SA, are warning that SA’s GDP could shrink by between 10% and 16.7%, despite the R500-billion support package unveiled by government, as well as the various monetary policy measures taken by the SARB.  The dismal outlook for SA comes against the backdrop of the World Bank’s forecast that the global economy will shrink by 5.2% this year, representing the deepest recession since the Second World War.  It expects SA’s growth to rebound in 2021 with growth of 2.9%.  Severely constrained government resources could lead to a curtailment of critical public services and there are also growing concerns that the pandemic may cause a food-security crisis in the region, as border closures and trade restrictions disrupt trading in food and agricultural products.

• Read the full original of the report in the above regard at Engineering News

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