South Africa is currently experiencing the devastating effects of the corona restrictions on the economy. Millions of people are fighting for survival there, and poverty has increased dramatically in just a few weeks.

South Africa has been struggling with structural economic problems for years

SSouth Africa’s economy collapsed massively in the second quarter due to the corona pandemic. The gross domestic product (GDP) shrank by more than 16 percent compared to the previous quarter, as the statistics agency Stats SA announced on Tuesday. Extrapolated to the annual rate, this results in a minus of 51 percent. For comparison: In the first quarter of 2009 during the global financial crisis, the annual slump was 6.1 percent.

The second largest economy in Africa – after Nigeria – is currently experiencing the devastating effects of the corona restrictions on the economy, which was already in recession before the virus crisis. Millions of people are fighting for survival there, and poverty has increased dramatically in just a few weeks. The state is likely to be short of R300 billion (15.4 billion euros) in tax income this year.

Finance Minister Tito Mboweni had already prepared the country for tax increases and drastic spending cuts. He expects the debt burden to grow to just under 82 percent of GDP by the end of the financial year. South Africa, with its high unemployment and enormous social inequality, has been struggling for years with structural economic problems and an unreliable electricity supply, which continues. The strong focus on the raw materials sector is also problematic – the corona crisis is also slowing down gold and platinum production.