Answer to Question #221219 in Macroeconomics for Nthabiseng Mphuthi

Question

Give an overview of the south African economy showing the trends in the past decade

Answer 1

In 2019, South Africa's real GDP increased by 0.2 percent. The epidemic and the containment efforts are taken to stop the virus from spreading and wreaked havoc on the economy. Construction, transportation and communication, manufacturing, and mining declined by 8.2 percent in 2020, resulting in a drop in real GDP. On the demand side, all components decreased, with investment contracting by the most, 32.4 percent. To aid firms and people impacted by the epidemic, the Reserve Bank of South Africa reduced the policy rate by 300 basis points in 2020, from 6.5 percent to 3.5 percent. Inflation is expected to fall to 3.4 percent in 2020, staying within the reserve bank's goal range of 3 percent to 6%. The budget deficit is expected to rise to more than 14% of GDP, mainly due to expenditure demands to mitigate the epidemic's economic impact.