South Africa is expecting an economic downturn by more than the 7 percent. It is reported that South Africa’s treasury department’s earlier forecast is expected to surpass the current trend as the economic crisis in the country deepens.
Finance Minister Tito Mboweni, told the media, “The contraction in growth is larger than anticipated by the National Treasury and the SA Reserve Bank, which raises the risk that the actual GDP outcome for this year could be lower than previously thought by both policymakers and the broader market. The government would move with greater speed via “Operation Vulindlela” (open the way), a joint initiative between the Treasury and the presidency announced in his budget speech in June and aimed at accelerating structural reform.”
South Africa’s GDP slumped 51 percent in the second quarter marking a back-to-back contraction for the fourth time in the year, as the lockdown due to Covid-19 has shut down industries and slowed down demand.
The country’s Reserve Bank expects a 7.3 percent contraction to its 2020 forecast. The treasury department pencilled in a 7 percent slump in its emergency funding, but reports suggest that the figures are higher.
Eskom, the country’s main energy suppliers has scrambled for years to fulfil the energy demand, unleashing nationwide blackouts to keep the grid from shutting down.
The company has debts of $30 billion and has been labelled as a threat to South Africa’s economy and fiscal stability. Furthermore, the government has been criticised for its sluggish move towards Eskom.